Prada, known for its luxury handbags, reported a less than 1 per cent increase in 2013 full-year profit, hurt by a continued weakness in European markets.

Prada, which also sells Miu Miu, Church’s and Car Shoe branded goods, recorded a profit of €627.8 million in the year ended January 31st, up 0.3 per cent from the previous year.

Analysts on average were expecting a profit of €673.58 million.Prada’s profit for the fourth quarter was €186.9 million, according to ThomsonReuters calculations, compared to the €132.64 million it earned in the third quarter.

Last year’s near-flat earnings are in sharp contrast to 2012, when Prada posted a 44.9 perc ent increase in earnings.

Weak European economies and a crackdown on corruption in China have hurt luxury goods makers, hitting both their traditional markets and their biggest new market. Many companies have slowed the pace of new store openings and instead focused on renovating existing stores.

Brands have also been searching for ways to cater to wealthy Chinese tourists who make luxury purchases abroad. Some brands are hiring Mandarin-speaking sales staff while others have held special promotions around the Chinese New Year holidays.

Prada’s 2013 sales rose 8.8 per cent to €3.59 billion, lagging the previous year’s 29 per cent gain, but matching the preliminary sales figure the company released in February. Sales in Europe, which accounted for about a fifth of Prada’s business, grew just 5 per cent.

Sales in Asia-Pacific, Prada’s biggest market, were much stronger, growing 11.4 per cent, with sales in China growing at 12.3 per cent.

Fourth-quarter overall sales were €1.01 billion.

Prada said at an investor presentation in Milan that it expects to open 80 new stores in 2014 and grow sales in the high single digits. The company said it plans to open 55 directly operated stores in 2015-2016 and have sales growth in the low teens.

Reuters