Luxury Goods Take a Hit With China Demand Slowdown

Italian luxury goods maker Prada (1913.HK) reported a 38 percent fall in quarterly profit on Tuesday, hit by slumping sales in Greater China as the country’s economic growth slowed.

A weaker Chinese yuan following this summer’s devaluation of the currency also discouraged purchases by mainland Chinese tourists in Hong Kong, a traditional shopping hub, in the three months through October.

Europe and Japan were the only two areas that saw modest growth, thanks to tourists, while a strong dollar held back travelers headed to the United States.

“Market conditions are still quite complicated,” Chief Financial Officer Donatello Galli told an analyst call, pointing to unstable financial markets and concerns about global security that hurt tourism.

Prada posted a 6 percent drop in sales in August-October to 748 million euros ($819 million). Stripping out the boost from currencies, sales were down 10 percent — with a 26 percent decline in Greater China.

via Reuters

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