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Prada to watch costs after 2014 sales drop

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[MILAN] Italian luxury fashion house Prada reported a 1 per cent dip in annual revenue on Sunday and said it would have to contain costs as growing retail sales in the Americas and Japan failed to offset declines in Greater China and Europe.

Revenues totalled 3.55 billion euros (US$4 billion) in the financial year ended Jan 31, just short of a forecast of 3.57 billion euros from top-rated analysts, according to Thomson Reuters SmartEstimate.

Chief Executive Patrizio Bertelli blamed a "more uncertain and complex" environment than anticipated for holding back Prada's expansion and vowed to contain costs to protect profit margins. "This situation has temporarily held up the group's path of growth, but it will not affect our medium/long-term growth objectives," he said in a statement on Sunday.

The Milanese label will open fewer shops than planned in 2015. It had 594 directly operated shops as of Jan 31 after years of breakneck expansion since its stock-market listing in 2011.

Prada said its retail sales were broadly unchanged year-on-year at 2.98 billion euros, although it opened more than 50 new shops in the course of the financial year. The group has stopped reporting same-store sales.

Prada said its Asian sales fell 5 per cent, despite a positive exchange rate impact, with the fall originating primarily in Hong Kong and Macau where it said market conditions had deteriorated "significantly" during the second half of the year.

It also mentioned the different timing of the Chinese New Year, which this year falls in February, for slowing down sales in Greater China.