Prada Shares Plunge to the lowest level in more than three years

Prada SpA fell as much as 6 percent to the lowest level in more than three years after the luxury retailer reported first-quarter profit that trailed analysts estimates as it struggled to reverse slumping sales to Chinese shoppers.

Prada shares dropped 5.8 percent in Hong Kong trading.

Net income in the three months through April plunged 44 percent to 58.7 million euros ($65.7 million), Milan-based Prada said in a statement. That is almost half of the average estimate of 85.2 million euros from eight estimates compiled by Bloomberg.

Hong Kong and Macau still remain challenged for at least six months, Nomura Holdings Inc. analysts led by Christopher Walker wrote on June 14, adding sales trends remains difficult and maintaining a reduce rating on the company.

The maker of $695 clogs and $860 wallets is opening fewer stores, shuttering some wholesale accounts and introducing more bags priced between 1,000 euros and 1,200 euros as it attempts to reignite demand amid a clampdown on corruption and extravagance in China.

First-quarter revenue rose 6.5 percent to 828.2 million euros as the weakness of the euro compensated for anemic growth in the Asia-Pacific region, Prada's most important market.

Asia-Pacific markets, especially Hong Kong and Macau, haven't shown any clear signs of recovery compared with the final months of 2014, Prada said Friday.

Prada said it is taking action that will involve in extensive plan to overhaul the entire value chain and that the first-quarter performance shouldn't be extrapolated over the full year. The company's plan includes opening less than 30 stores net of closures in 2015 and curbing discretionary expenses, Prada said.