Prada aims to double its online sales in each of the next three years
© Bloomberg

Italian luxury goods group Prada on Monday said sales growth in January showed “positive results”, marking a turn in fortunes after falling revenues for more than a year.

Announcing preliminary results for the year to January 31, Prada said that total revenues had fallen 9 per cent at constant currency to €3.184bn.

But the Milan-based group said that sales had improved in the last months of 2016, underlining a return to growth for the battered luxury sector.

“Particularly positive was the performance of Russia, with double-digit growth, and the UK which reversed the decline of the first six months to end the year with strong growth,” the group said.

Prada follows rivals, including LVMH, Gucci-owner Kering and Burberry, in reporting stronger sales after several years of slowing demand as luxury tourism waned in Europe and demand slowed in China.

Like those peers, Prada is in the throes of a revamp to lure shoppers back to buying its €2,000 handbags and €1,000 shoes. A laggard in embracing e-commerce, the group aims to double its online sales in each of the next three years and increase its offering online.

Prada said there were “clear signs of recovery in the last quarter” in France. while declining sales in Hong Kong and Macau were moderating, it added.

Rogerio Fujimori, an analyst at RBC Capital Markets, wrote in a note: “Prada’s sales performance was broadly in line with expectations and improving fourth-quarter trends should be evaluated against a sector backdrop where virtually all its peers have beaten fourth-quarter sales consensus in recent weeks.”

January sales, he said, were likely to have benefited from calendar effects related to the Chinese new year, which fell earlier this year.

On a geographic basis last year, revenues fell 12 per cent in Asia-Pacific at constant currency, 5 per cent in Europe, 12 per cent America, and dropped 10 per cent in the Middle East. Sales in Japan fell 13 per cent after five years of growth.

Fflur Roberts, head of luxury goods at research group Euromonitor, said 2016 was “another challenging year for the personal luxury goods industry” as social and political unrest, economic slowdown, terrorism and conflict restrained consumer’s desire to splash out on high-end goods.

Globally, the industry recorded sales growth of just 3 per cent in real terms, a sharp slowdown from the boom years of the past decade, to about €390bn, according to Euromonitor.

“As tough global trading environments continue to prevail, the market and key luxury players face mounting risks in 2017,” Ms Roberts said.

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