Prada Is Evaluating Whether To Seek Price Cuts.

Prada group released its 2014 earnings report at HKEx yesterday. As of January 31, 2015, the group's annual net profit plunged from 627 million 800 thousand euros (4 billion 200 million yuan) in fiscal year 2013 to 450 million 700 thousand euros (about 3 billion yuan), a decrease of 28.2%.

This is the first time that Prada group has seen a decline in its performance in Hong Kong for the first time in four years.

At the earnings conference, Stefano Cantino, Prada's marketing director, said that the Prada group would consider reducing prices in Japan's Asian region after Easter (April 5th), but did not disclose specific price cuts.

Earlier this month, French brands, Dior and Chanel, all had a price cut.

At the beginning of March, the price of Dior's two packages, Miss Dior and Soft Dior, dropped slightly, for example, Miss Dior dropped from 29 thousand Hong Kong dollars (23 thousand and 200 yuan) to 26 thousand Hong Kong dollars (20 thousand and 800 RMB), while Chanel had a large scale reduction of 20% at most.

Apart from the price reduction,

There will also be more packages priced at 1000 euros (6688 yuan) to 1200 euros (8025 yuan), and some wholesale businesses will be closed to cope with the increasingly serious luxury market.

In addition, Prada has decided to slow down its pace of expansion.

In 2015, Prada planned to open 30 stores, almost half of 54 new stores last year.

Exane BNP Paribas, a securities division of Paris's Bank of France, told Bloomberg that the move was mainly due to the stunning product mix of Prada, and the group could not think of any good way to fight corruption.

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Financial reports show that Europe and the Asia Pacific region are the "leading culprits" in the decline of earnings.

They fell by 4.9% and 3.1% respectively.

The Asia Pacific region has been the most important Prada market. Its sales performance accounted for 1/3 of the group's global performance, of which 60% came from the Greater China region.

In fiscal year 2014, sales in Prada Greater China dropped by 6.3%.

"The international economic environment of the group's operation is particularly difficult in 2014."

Prada said in its annual report, "the reason is that persistent economic uncertainties and political and social tensions are affecting many important markets."

Bloomberg analysis shows that China's anti-corruption actions and the sluggish Hong Kong and Macao market have led to a decline in sales in the Asia Pacific region.

Prada annual report pointed out that sales decline mainly came from Hongkong and Macao.

Mainland tourists account for 78% of the tourists to Hongkong. These tourists are reducing their consumption of luxury goods.

In 2014, luxury goods sales in Hongkong fell by 14%.

At present, Prada has yet to come up with a better coping strategy instead of a more conservative defensive strategy.

"There is still uncertainty in the international luxury market," the Prada annual report points out. The main reason is the "local market problems in some markets and the continued volatility of the currency". Under this circumstance, Prada decides to save money and reduce food and clothing -- "we are striving to control costs in the short term".