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Category: Fashion

Retail News Asia is committed to providing both local and global retailers with the latest Fashion news throughout the Asian market. This on a daily base.

  • Here’s Why All That Glitters Is Not Gold In China Jewelry Market

    Here’s Why All That Glitters Is Not Gold In China Jewelry Market

    Market reports on Wednesday claim that Jewelry manufacturing and retail industry are among the worst hit sectors in China due to a slowdown in the country’s economic growth. Shuibei, which was once the mecca for Jewelry retail and production in China, is now feeling the heat in terms of declining number of consumer visits due to the economic uncertainty in China.

    Among the most pertinent reasons for slumping gold demand in China are the economic slowdown as well as the government’s anti-corruption drive which has resulted in low demand for luxury items. However, the most worrisome sign for Chinese gold market is the fact that the consumers have started to become wary of the prevailing economic uncertainty. The shaken consumer confidence is likely to hit the Chinese gold market, which is also the largest market in world for the precious metal.

    Analysts say that China is entering the maturity phase of its economic cycle after growing exponentially for the last few decades. As the economic growth slows down, there may be uncertainty regarding how the government and certain sectors deal with it. This situation has been made worse by the devaluation of Chinese yuan by the People’s Bank Of China (PBOC) in August. The yuan has suffered a constant decline since and some analysts believe that this might be a deliberate step by the Chinese government.

    The gold prices are already languishing at a six-year low due to global economic uncertainty. Therefore, with China and India, the largest and second largest gold markets going soft, it would only mean more trouble for the global gold prices.

    Many of the businesses in the Shuibei district of Shenzhen have suffered a slump in trade due to the current gloomy economic growth forecast for China. This is happening due to a shift in customer confidence from being enthusiastic to wary.

    According to Wang Zhichang, regional manager of Glory Gold store, the demand for gold is unlikely to pick up anytime soon due to the fact that consumers have lost confidence in the precious metal. Therefore, it is quite possible that the revenue in the Chinese gold industry may fall in 2016 at least 10%. The revenue of Chinese gold market overall has seen a plunge of almost 20% in the current year.

    Mr. Wang also claims that due to the worsening gold market conditions in China, a number of factories had shut their operations in the last 12 months. The impact of the current slump in Chinese economy on local gold market is so widely spread that even the nationwide huge gold retail chains like Chow Tai Fook are forced to close outlets and cut down future store openings.Chow Tai Fook, the largest gold retailer in China in terms of market value, had to suffer a 42% plunge in net profit for the period from April to September 2015. This has forced the company to plan opening of only 60 stores in China in its current financial year which ends in March 2016, instead of the originally planned 150 outlets.

    A representative of Chow Tai Fook opined that the customers had become more rational with their choices and purchases in the recent times. This translates into the pressure under which the Chinese gold industry is at the moment.

    CBN opines that it was only a matter of time before the worse impacts of the economic slowdown in China began to reflect on the country’s booming gold market. With the prices of gold falling on a global level and the economic uncertainty in China, the gold market was always going to suffer. We believe that as the growth in Chinese economy slows down due to the country entering the maturity stage of its economic progression, the consumers are likely to become more wary of making bold acquisitions.

    We believe that Chinese customers are likely to want an added value for the transactions they make in the current circumstances. With the gold prices falling globally, the sense of security of holding on to a precious metal is no longer going to be the driving force for its purchase. Furthermore, doubts over economic growth are likely to force the hand of Chinese consumers towards basic necessities more than luxury acquisitions. Therefore, the struggle in the gold market in China is likely to continue at least for the coming couple of years.

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  • Nike Defies Stagnation in U.S. Retail, China as Orders Surge

    Nike Defies Stagnation in U.S. Retail, China as Orders Surge

    Nike Inc. posted second-quarter results that showed the footwear and athletic-apparel giant remains largely immune to the shopper malaise that’s plagued much of retail.

    The world’s largest sporting-goods maker posted profit of 90 cents a share, topping analysts’ average estimate of 86 cents, as it continued to reap the rewards of a dominant brand and the ongoing fashion shift toward casual, sporty attire. It also defied concerns about slowing economic growth in China, with revenue there gaining 24 percent to $938 million.

    • Orders for the Nike brand for the next four months rose 20 percent, excluding the effects of currency. Analysts expected a 13.6 percent gain.
    • Net income increased 20 percent to $785 million.
    • Sales rose 4.1 percent to $7.69 billion. Analysts estimated $7.81 billion.
    • Gross margin widened 0.5 percentage point to 45.6 percent.

    The shares rose as much as 4.1 percent to $137.31 in late trading in New York. Nike had gained 37 percent this year through the close on Tuesday.

    “Overseas markets have great potential,” for Nike, said Paul Swinand, an analyst at Morningstar Inc. “Investors should take a read on Chinese consumers from the futures orders: There’s room to purchase new Western goods in people’s budgets. That highlights the potential for the long-term middle-class growth there.“

    $50 Billion

    The earnings report is Nike’s first since it announced a goal of increasing annual sales to $50 billion by fiscal 2020, up from $30.6 billion in its most recent fiscal year. The target implies an annual growth rate of 10.3 percent, slightly higher than the past two years. The company expects about a third of those gains to come from its online business. That trend played out last quarter, with sales through its websites surging 49 percent.

    In the most recent quarter, Nike’s China unit was the standout. Footwear sales there gained 30 percent to $600 million, while apparel revenue climbed 15 percent to $306 million. The strength looks set to continue, with futures orders for the segment increasing 34 percent, excluding currency effects.

    Part of Nike’s success in China has been a plan started two years ago to revamp its distribution and merchandise — like the fit of its apparel — after a glut of inventory after the Olympics weighed on results. It also has been selling more products through its own stores and websites, which is part of a companywide strategy. Revenue from those segments in China rose 51 percent last quarter.

    North America also turned in a strong performance, with sales increasing 9.4 percent to $3.55 billion. Footwear led the gain, with a 12 percent increase. North American futures orders grew 14 percent.

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  • Esprit just made a lot of money? Look again

    Esprit just made a lot of money? Look again

    Fashion icon Esprit is making headlines again, this time for the profitable sale of its Hong Kong headquarters.

    The struggling retailer said it made a profit of HK$725 million (US$93.53 million) from the sale of the premises — five floors in Enterprise Square in Kowloon Bay — to Phoenix Property Investors for HK$918 million.

    The buyer plans to lease the space back to Esprit for HK$2.43 million a month. That’s equivalent to a gross yield of about 3 percent on the deal, or 4 percent, assuming the additional one floor will be leased to Esprit at the same rate.

    The lease, which starts after the deal closes in March, will be for three years, renewable at a 20 per cent premium after the third year.

    The money would have been nothing to Esprit, once owned by Michael Ying, in its heyday when it churned out HK$5 billion in profits. In the financial year to June 30, 2015, Esprit made a net loss of HK$3.7 billion, or HK$1.90 per share.

    Esprit bought the property in 2004 for HK$200 million during the so-called “golden decade of retail” as mainland tourists began arriving in Hong Kong in great numbers.

    At the end of the heady run, apparel retail sales were up 126 per cent, with the biggest chunk going to three global fast fashion retailers — Japan’s Uniqlo, Sweden’s H&M and the Spanish giant Zara.

    Apple Daily reports that the three retailers have more than 80 outlets in Hong Kong combined.

    Most of its rivals did not disclose their sales figures but H&M said it recorded HK$1.29 billion in the first three quarters ended August.

    Where was Esprit in all of this?

    The Hong Kong flagship was embroiled in one of the greatest collapses in the competitive fashion industry.

    Sales from Hong Kong were down 8.4 per cent to HK$386 million, with its store network shrinking to 15 shops from 46 in 2006.

    Among the big winners were small designers such as Bauhaus, I.T. and low-end retailers such as Bossini, although Giordano lost market share.

    Altogether, local brands had 460 shops last year, according to Apple Daily, but their market share fell to 14.5 per cent from 18 per cent in 2006. Now we know why Esprit had to sell its headquarters.

    Yet, this is only one chapter in a painful restructuring that has already lasted more than five years.

     

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  • Nan Hai plans big China push for Crabtree & Evelyn

    Nan Hai plans big China push for Crabtree & Evelyn

    Nan Hai Corp. is planning a big push in the mainland China market after acquiring a company that manufactures and sells skincare products under the Crabtree & Evelyn brand.

    The Hong Kong-listed firm has received leasing invitations from several shopping malls in the mainland, and is planning to open its first Crabtree shop in a first-tier city, the Hong Kong Economic Journal reported.

    It aims to leverage the brand image and establish points-of-sale in various retail locations, including movie theater complexes and food and beverage outlets, the report said, citing Yu Xin, managing director of Nan Hai’s subsidiary Dadi Digital Cinema.

    Nan Hai plans to set up sales spots at its 270 movie theaters across the country to promote cross-sales and electronic commerce.

    Crabtree & Evelyn has 30 retail shops in Hong Kong and an aggregate of 4,000 sales spots around the globe.

    The brand’s sales in Asia and North America declined last year.

    Yu expects profitability to improve due to integration of resources and supply chain, as well as fresh marketing initiatives, once the acquisition is completed.

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  • Hong Kong a drag on Prada

    Hong Kong a drag on Prada

    Luxury fashion group Prada says the Asia Pacific market continued to decline during the first nine months of the new financial year.

    And Hong Kong and Macau have taken the blame – again.

    During the last three quarters, sales in the region fell 4.9 per cent at current exchange rates.

    “This is due to reductions in both local consumption and tourist flows within the region, with Hong Kong and Macau particularly affected,” Prada said in its results statement.

    But Japan helped ease the pain. Prada sets Japanese sales apart from Asia Pacific sales, reporting a 10.4 per cent increase in sales at current exchange rates and 4.6 per cent at constant exchange rates, driven largely by the rising number of Chinese tourists – many of whom in previous years would have visited Hong Kong to shop for luxury goods.

    In Europe, too, the influx of Asian tourists boosted sales, which rose 8.6 per cent at current exchange rates and 7.6 per cent at constant exchange rates. The Italian market continued to stand out among the various European countries and recorded growth rates well above the average for the area.

    On the American market sales increased at current exchange rate by 8.5 per cent, but showed a negative underlying trend, down 7.6 per cent at constant exchange rates.

    “The significant strengthening of the US dollar over the period had an adverse impact on tourism, mainly from China and South America, but, at the same time, it encouraged a shift in American consumer spending towards Europe,” Prada said.

    By brand, Prada recorded a 2.1 per cent global sales  increase which was entirely attributable to the exchange rate effect. Miu Miu has grown with revenues up at both current exchange rates (+11.8 per cent) and constant exchange rates (+1.9 per cent). Church’s has also achieved sales growth (+17.6 per cent), a positive trend also on a like-for-like base.

    The licensing business (eyewear and fragrances) performed very well, with royalties for the nine months to October 31, totalling Euro 33.5 million, a 16.2 per cent increase, in large part thanks to the launch of the first Miu Miu fragrance.

    Prada Group’s consolidated revenue for the nine months was Euro 2.583 billion. This represents a 1.2 per cent  increase at current exchange rates on the corresponding period in 2014, entirely thanks to directly operated store sales. Wholesale revenues decreased as the group continues to reduce its presence in that channel.

    Net profit was Euro 235.1 million or 9.1 per cent of net revenue.

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  • Superdry delivers stunning turnaround

    Superdry delivers stunning turnaround

    SuperGroup, owner of the global lifestyle brand Superdry, has achieved an impressive 22.3 per cent increase in sales for the first half year, to £254.7 million.

    SuperGroup’s retail arm represented its strongest division, generating 30.8 per cent growth to £172.1 million, reflecting the continued expansion of wholly owned stores in the EU. Additionally, retail same store sales saw a major turnaround, increasing rapidly by 17.2 per cent compared to a decline of 4.1 per cent during the same period last year.

    This was driven particularly by a strong eCommerce performance. Online retail sales grew by 19.2 per cent as its digital channel continues to be its fastest growing route to market.

    “That noted, SuperGroup’s core focus remains on significant physical expansion within its key markets – Europe, North America and China,” observes  Anusha Couttigane, senior consultant with retail analyst Conlumino

    As part of its full year strategy, the group has set out to expand own store space by some 130,000 sqft  (12,000 sqm) within Europe. So far, nearly half this target has been achieved, the company having opened 14 net new stores comprising 63,000 sqft (5850 sqm) of new trading space during the first half year.

    Elsewhere, its wholesale arm saw 23 international franchise and licensed stores open during this period, contributing to a 7.8 per cent growth in wholesale revenue. However, the seasonality of its products has caused the group to announce an expected £3 million to £3.5 million operating loss in its North American operation for the full year as it realigns its product offer for its customer proposition on the continent.

    “With a successful first half completed, SuperGroup has positioned itself well for the all-important Christmas trading period,” comments Couttigane.

    “In the run-up, product innovation has been leveraged to encourage new customers, including Superdry’s premium collaboration with Idris Elba and its Superdry Sport and Superdry Snow collections for women, making the brand a strong contender for Christmas wish lists.

    “However, while its first six months have benefited from soft comparatives, the second half is set to be more demanding,” she concluded.

    SuperGroup’s full year pre-tax profit projection remains stable at £72.1 million.

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  • Japan’s Miniso opens Singapore flagship

    Japan’s Miniso opens Singapore flagship

    Japanese fast fashion brand Miniso has opened new flagship stores in Singapore and Dubai as it works on a global rollout.

    Miniso, founded by designer Miyake Jyunya and partner Ye Guofu, advocates the philosophy of ‘simple, natural and quality life and brand essence’ by “returning to nature and restoring product nature”.

    The brand is opening new stores at the rate of 20 to 30 a month, with China – where it made its debut in 2013 – a major focus.

    Jyunya, who attended the Singapore store opening at the Harbourfront Centre on Saturday (December 12), aims to provide “high-quality, low-priced and innovative products for global consumers”. Its stores are decorated in a fresh and natural style, establishing a service-oriented shopping environment that is finding favour with consumers.

    Jyunya described the Singapore and Dubai openings as “a major milestone in the company’s globalisation strategy”.

    “As one of the most developed market economies in Asia, a key services and shipping hub and the fourth global financial center after New York, London and Hong Kong, Singapore is an important destination for Miniso’s first international venture. Singaporean consumers have always been sensitive to changes in fashion, a philosophy built on and shared by Miniso,” the company said in a statement.

    “Dubai likewise is a significant location in the global services and retail sector and serves to highlight the newly established reach of the Miniso brand in addition to its ability to expand into developed markets.”

    In future, Miniso plans to continue to actively explore internationally, with the aim of offering a new generation of consumers an alternative to high-level retail through quality products at affordable prices.

    After its expansion into Singapore and Dubai, the company will turn its attention to Europe and eventually the rest of the world, “evolving into a superior international brand enjoyed and talked about by consumers everywhere”.

  • H&M blames weather for poor sales growth

    H&M blames weather for poor sales growth

    Hennes & Mauritz, the world’s second-largest apparel retailer, has reported a four per cent rise in sales in November.

    H&M says the increase was lower than expected due to unusually mild weather in the northern hemisphere, which lessened customer demand for winter clothing.

    Analysts are growing increasingly concerned about H&M’s margins, fearing they will come under pressure if stock has to be discounted to move inventory.

    Inditex, the world’s largest apparel retailer, last week reported sales in local currency terms increased 15 per cent in November, despite the weather.

    H&M’s net sales in September through November, the company’s fiscal fourth quarter, totalled 48.7 billion Swedish crowns (£3.83 billion), up from a year-ago 42.6 billion but below the mean forecast of 49.6 billion.

    Year on year, H&M has added 413 new stores, taking its global network to 3924.

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  • Fashion trends in China renew interest in broad wool types

    Fashion trends in China renew interest in broad wool types

    Once a sideline part of the wool industry, cardings have now become the unsung hero of the wool market. Cardings are made up of the wool from the bellies and other parts of the sheep that don’t make the fleece lines. Demand for heavy jackets and coats in China has led to strong returns for Australian wool growers.

    Robert Herman, managing director of Mercado Market Insights, said the demand for cardings was underpinning the entire wool market. It’s not understated to say that the demand for cardings is underpinning the whole wool market at the moment.

    “In this case the most significant driver is this demand for double-faced woollen fabric, which has come and gone in the past, but it’s really started to find a home on the retail shelves in China,” he said.

    “First of all it started in the high end market and then started to show up in the cheaper lines and it’s just something that people seem to like. This fabric is not only made out of cardings but also crossbred wool, which has also had a terrific run [this year]. So it’s a direct connection between the price that’s being paid and the appetite that exporters have for that type of wool.”

    “While it’s a good market signal, I think with fashion though, fashion comes and goes, we don’t think this is changing in a hurry but it will change over time.” As northern hemisphere fashion houses make their decisions for 2016, the future appears bright for cardings according to Mr Hermann.

    “We thought this run was coming to an end but it’s resurrected back over 1,100 cents at a time when the new fashion decisions are being made in the northern hemisphere” he said.

    “So it looks to us like it’s got another season to run at least.”

    There is potential that the trend could have a broad impact of the way consumers feel about buying wool. “It can make people more aware about the intrinsic value of wool, more people wearing wool for whatever reason is good, if it’s just because they are following fashion, it doesn’t matter,” Mr Hermann said.

    In the past the cardings indicator has tagged along with the fleece lines but this year that trend has reversed. “What we’re seeing now is that this strong resilience of the cardings indicator is really putting a strong floor under the rest of the market,” Mr Hermann said. “Even though we like to see the rest of the market have the same types of rallies, it’s not understated to say that the demand for cardings is underpinning the whole wool market at the moment.”

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  • China’s JNBY fashion brand debuts store in Pacific Place

    China’s JNBY fashion brand debuts store in Pacific Place

    JNBY, a big Chinese fashion retailer, now has its shingle hanging at Pacific Place mall.

    The brand has more than 700 stores, mostly in China, but some in Europe, Asia and Canada. Its store here is being heralded by SightClassic LLC, the Seattle retailing company that runs the location, as JNBY’s first in the U.S.

    But it’s more complicated than that: The brand had a pop-up store in New York’s SoHo in 2009, which according to media reports, a few months later turned into something more permanent. That experiment failed: It closed after two years, according to retail website Racked.

    Perhaps it’ll fare better in Seattle, where the recent visit of Chinese President Xi Jinping highlighted growing economic ties with the Asian superpower.

    SightClassic says it’s JNBY’s “fully authorized distributor” in the U.S., and that it operates an online JNBY store on Amazon. On Thursday, however, the website featured no products for sale.

     

     

  • Olivia Burton launches first stand-alone retail presence in Hong Kong

    Olivia Burton launches first stand-alone retail presence in Hong Kong

    British watch brand Olivia Burton has launched its first stand-alone retail presence in Hong Kong.

    The move comes as a partnership with the company’s Hong Kong distributor – Working Unit – and has seen three Olivia Burton-dedicated ‘watch corners’ open across the city in Kapok retail stores.

    The company said it launched the stores in December 2015 in an effort to capitalise on the Christmas shopping period.

    Located in prime locations that offer “high traffic and consumption”, the Olivia Burton watch corners are based in the LCX store in Tsim Sha Tsui, the apm mall in Kwun Tong and the New Town Plaza in Shatin.

    Jemma Fennings, brand founder and managing director of the brand, said the launch of the retail corners mark a “huge milestone” for the brand and its international presence.

    She said: “The label has proved extremely popular with the Asian market since we started trading internationally and to be able to offer a dedicated retail space that is designed and merchandised by our in-house team is really exciting.

    “We’re looking forward to increasing our brand awareness and product offering within the Asian market and hope to add additional retail spaces to the current portfolio in the coming year.”

    The stand-alone corners will stock a wide range of Olivia Burton styles and new collections will be added every two months.

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  • Marks & Spencer Hong Kong plans giant new store

    Marks & Spencer Hong Kong plans giant new store

    UK department store Marks & Spencer is planning to open one of its largest stores in Hong Kong early next year in Cheung Kong Property’s Wonderful Worlds of Whampoa centre in Hung Hom.

    According to a report in the South China Morning Post, California Fitness is vacating its space in the centre to make way for the new Marks & Spencer Hong Kong store, which will take up at least 40,000 sqft (3700 sqm). Other smaller tenants will also be moved to make way for what will be M&S’ 24th store in the territory.

    Helen Mak, senior director of retail services at Colliers International, told the SCMP Whampoa has been “a missing district for international brands” in the past.

    “With the new MTR station in place very soon, the landlord sees more chances for retail business.

    “It is more of a consideration of adding diversity to the existing mall, from landlord’s point of view,” Mak said.

    The Whampoa MTR station, part of the Kwun Tong extension line from Yau Ma Tei, is currently under construction and scheduled to open late next year.

    Fast fashion brands Uniqlo and H&M recently opened in the Wonderful Worlds of Whampoa centre and Mak says she expects more international brands to follow as the mall morphs into more of a regional mall.

  • Inditex Asia: the relentless push continues

    Inditex Asia: the relentless push continues

    As Spanish apparel giant Inditex continues its global expansion in earnest, the Inditex Asia business is accounting for a major share of the action.

    Inditex is committed to both multi-brand and multi-channel strategies as it builds it global dominance of the fast fashion market.

    During the first nine months of 2015 it opened 230 stores in 48 markets.

    Online, Zara extended its eCommerce presence to Taiwan, Hong Kong and Macao. Inditex also launched online operations in the southern hemisphere with the launch of Zarahome.com in Australia on December 3 – soon after the homewares brand opened online in Japan.

    Pull&Bear, Massimo Dutti, Stradivarius and Oysho all launched online in China.

    Inditex opened physical stores in all continents during the nine months to the end of October. The net number of stores across the group’s brands increased by 109 in Europe, by 47 in the Americas – and in Asia and the rest of the world, by a net 74, taking the group’s global store count to 6913.

    In Asia, these openings included new Zara stores in Osaka (Japan), Beijing, Harbin and Hong Kong (China) and in Singapore.

    Bershka opened its first store in Taiwan and a flagship store in Korea; and Stradivarius, with openings in the Chinese cities of Chengdu and Harbin.

    Oysho has opened its first store in Korea; Zara Home opened its flagship in Sydney (marking its 500th store worldwide).

    As at the end of October, Inditex had a presence in 88 markets, with online operations in 28 of these.

    Inditex said its net profit over the first nine months of the year was up 20 per cent to €2.020 billion. Net sales increased 16 per cent year on year to €14.74 billion.

  • Under Armour Singapore store largest yet

    Under Armour Singapore store largest yet

    The new Under Armour Singapore store at Bugis Junction is the fast-growing sportswear brand’s largest in the city, and second largest in Southeast Asia.

    The fashionable sportswear brand is growing rapidly, especially in Asia where it has 15 solo-brand retail stores and a presence in nine markets.

    The new Bugis Junction store is 2960 sqft (275 sqm), a fraction smaller than its largest, the 3000 sqft store at the Pavilion in Kuala Lumpur, Malaysia.

    An instantly recognisable statuesque Under Armour logo is proudly erected at the front of the new brand house, while the concept for it echoes the industrial and gym-inspired interiors displayed in existing Under Armour brand houses, retaining the signature accents consistent to all global Under Armour stores – including the use of metal and wood furnishings and the Under Armour Thrones, large black leather seats with the logo stitched in red built within the footwear zone.

    Under Armour says the Bugis Junction store “embodies a retail experience that awakens the fierce and high- intensity energy and signature philosophy of the Under Armour brand”.

    It is the first store to exclusively stock the basketball range and childrenswear, and will soon exclusively stock the Hunting, Tactical and Outdoor series.

    “Bugis Junction has been a key locale for entertainment, recreation and retail for both the youth and working professionals for decades. With many specialised gyms and fitness destinations in the area, Under Armour Bugis Junction is the ideal complement to kickstart or to maintain a fit and healthy lifestyle,” explains Michael Binger, CEO of Triple, the local licensee of the brand.

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  • Prada shares hit all-time low as China’s slowdown hits sales

    Prada shares hit all-time low as China’s slowdown hits sales

    Prada shares have fallen sharply in Hong Kong, after analysts reacted negatively to the fashion company’s latest financial results which came in well below expectations.

    The Italian fashion house, which specialises in leather fashion and fashion accessories, shoes, luggage, perfumes, and watches, reported third -quarter sales of €747.7 million, down 6% from €792.3 million a year earlier, as sales in China deteriorated further and US sales were hit by the strength of the dollar which crimped tourist spending.

    The sales were well below analysts’ expectations of about €816 million, while earnings before interest, tax, depreciation and amortisation of €155 million came in below expectations of €170 million. Prada’s efforts to improve the efficiency of its supply chain boosted gross margin, but this was then more than offset by higher operating costs associated with its retail expansion.

    Retail sales were down 4% overall, with wholesale sales down 26%. Retail sales fell 17% in China, which the company blamed on the volatility in the Chinese stock market in August and September, and were down 4% in the Americas, offsetting rises of 2% in Europe and 8% in Japan. Middle East sales were down 3%.

    Those sales were flattered by the weakness of the euro, and were even worse at constant exchange rates. Chinese sales were down 26%, Americas sales down 13%, and Middle East down 4%. Japanese sales were only up 4%.

    Prada’s growth in Europe was also a marked slowdown from the 10% and 12% growth reported in the first and second quarters of the year, respectively.

    “Prada also commented that the recent attacks in Paris have deterred tourist traffic from Europe. Some improvements in mainland China were noted, but trends are difficult to extrapolate at this point, while the US sees continued weakness, with a promotional market into the seasonal period a further headwind,” writes Nomura Analyst Christopher Walker.

    He notes that Prada has pledged to better harmonise its global prices, with a target of reducing the price gap between China and Europe to about 10% to 15%. Prices of some new products in Europe have already been raised, but Walker thinks Prada “may need to take more immediate action on Asia pricing”.

    Nomura is retaining a Reduce rating on the stock, and has lowered its target price for the stock to 26 Hong Kong dollars.

    Prada’s shares fell 6.6% to HKD24.85 a share in Hong Kong on Wednesday, marking a new all-time low for the stock and meaning they’re down 42.9% so far in 2015.

    J.P. Morgan Cazenove has cut its earnings estimates for the year as a whole by a further 6% on the back of Prada’s third quarter report, and has reduced its target price for the stock to HKD33. The broker has a Neutral rating on the stock.

    Its analysts think Prada is compounding a tough environment for the luxury sector with brand-specific issues and high operating expenditure that it’s only just getting under control.

    They also think that Prada’s warning of a further deterioration in European sales since the terrorist attacks in Paris bodes ill for the luxury sector as a whole, although Prada looks like being among the worst hit. Most of the sales luxury goods companies make in European cities like Paris and London come from tourists.

    “The further deterioration in the trend is not a surprise: tourists are critical to the luxury goods sector and the Paris tragic events dent tourist flows (note that Japan Airlines announced that it was stopping its Paris-Tokyo Narita routes today until March after a 60% slump in bookings),” they write. “Peers though seem to have noticed mainly an impact in Paris and Brussels and not in other European capital cities.”

    The analysts think the fourth quarter of 2015 will be weak for the whole luxury sector, as the Paris attacks weigh on European sales. They think sales will remain strong in Japan; improve in South Korea; be slightly improved in Asia Pacific due to weak comparative figures from a year earlier; and remain weak in the US.

    Nomura and J.P. Morgan Cazenove weren’t the only analysts to cut target prices for Prada’s stock on Wednesday. Bryan Garnier slashed its target price to HKD41, from HKD52, and Bernstein cut its price to HKD25 from HKD26.50. Bocom International Securities reduced its rating to Sell, from Neutral.

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