On Wednesday, Italian luxury brand, Prada announced that the global Coronavirus outbreak has halted two years of sales growth, which increased in the second half of 2019.
As the fashion industry’s sales continues to be severely impacted during the crisis, Prada said that this “interrupted the growth trajectory” will have a negative affect on this year’s results.
In a statement the luxury brand said: “Prada is implementing a comprehensive contingency plan to mitigate such effects, relying on its flexible supply chain and lean organisation.”
Prada added that it was confident it could overcome the crisis and “be ready to capture the recovery.”
Full-year sales rose by 2.7% to 3.226 billion euros ($3.52 billion) at current exchange rates compared with a 2% increase in the first half of 2019, but they were flat at constant rates.
This is the second year in a row of sales growth after a three-years decrease, assisted by a relaunch strategy focused on renovating shops, new products and digital sales.
Earnings before interest and taxes (EBIT) decreased 5.3% to 306.8 million euros last year, hit by ongoing measures to reduce markdowns and scale down the wholesale distribution network.
Analysts predicted revenue of 3.21 billion euros and an operating profit of 306 million euros, according to Smart Estimates provided by Refinitiv.
In 2019, Prada said it would reduce its wholesale network in Italy and Europe to maintain uniform prices for its products across different outlets and reduce markdowns and discount sale prices to boost long-term profitability.
In the July to December period, last year, full-price sales grew at a double-digit rate and “more than offset sharp reduction in markdowns.”