FLORENCE, Italy -- Italian luxury fashion brand Prada will expand its online sales platform, offering more products and adding new markets, in the face of falling sales at bricks-and-mortar stores.
The company will open online stores for China, South Korea, Russia, Australia and New Zealand by the end of the year and expand its e-commerce operations further afield next year. The range of products available online will also be expanded. In the near future, customers will be able to purchase any product online that they can buy at physical stores, CEO Patrizio Bertelli said in an earnings briefing here Wednesday.
Excluding the impact of exchange rate fluctuations, Prada saw sales at its directly run stores and franchise locations drop 13% in the year ended in January, but its wholesale division increased sales by 15%, thanks to tie-ups with third-party online stores. As more people become comfortable ordering high-priced products over the internet, the company is shifting away from its traditional focus on store sales.
In line with the change, Prada will limit new openings to flagship stores and other locations that will enhance its brand presence. The company reported a net store increase of just two last fiscal year. In the current year, it plans to renovate 50 or so mainstay Prada stores, with an eye toward attracting more customers.
Prada's sales fell 10% last fiscal year to 3.18 billion euros ($3.38 billion), suffering a third consecutive year of declines. Chinese tourists have sharply cut back their overseas shopping sprees, impacting Prada's sales in various locations. In France and other European countries, terrorist attacks also hurt sales, as consumer sentiment was adversely affected. Sales in Japan declined 5%. Overall operating profit slipped 14% to 431 million euros.