Prada's profit falls 20 pc, hit by fall in leather goods sales

The Italian fashion house Prada has reported a drop in profit, hit by a fall in leather goods sales and currency fluctuations.

First-half net profit fell 21 percent to 244.8m euros (£192.5m; $314m), the company said.

It said the strength of the euro had hurt sales as well as a "difficult economic" environment.

Ahead of the announcement, Prada shares fell 1.3 percent in Hong Kong, to their lowest level in more than two years.

Prada expects profits in the second half of the year to be broadly in line with the first half, however "margins will continue to be under pressure with some marginal improvements deriving from the costs-cutting actions," the company said in a statement.

"We remain confident that the luxury goods market - especially the high-end segment where the Prada Group operates with success - will continue to offer interesting growth prospects in the medium-term," said Prada's chief executive Patrizio Bertelli.

Revenues from sales of leather goods, a category with a high profit margin, decreased by 1.4 percent , mainly because of a decrease in tourist footfall in the main shopping destinations in Europe and Asia, Prada said.

Sales in shoes and ready-to-wear clothes rose, as did menswear, which saw sales rise 19 percent in the first half of the year as men become more fashion conscious.

Rahul Sharma, a retail analyst at Neev Capital said the company had become less exclusive as a brand, but more exclusive in price, and as a result was losing out to competitors.