* Q1 revs 686.7 mln euros vs 640 mln eur f'cast
* Net profit 121.7 mln vs 98 mln eur f'cast
* Profits outpace revenue growth
* Says euro crisis may impact tourism sales
(Recasts lead, Adds vice president quotes)
By Antonella Ciancio and Farah Master
MILAN/HONG-KONG, June 7 Italian fashion group
Prada warned a deepening euro zone crisis could scare
away free-spending tourists who have shielded luxury firms from
an uncertain global economy and who helped lift quarterly profit
at the maker of coveted leather handbags and shoes.
First-quarter profit doubled at the Milan-based maker of
coloured Miu Miu dresses, outpacing revenue growth, but the
company is not immune from concerns about the euro zone, a
sluggish U.S. recovery and a possible slowdown in Asia.
"If the Greek crisis spread to Spain or Italy it would slow
tourist flows. And if it affected tourists, it would impact us,"
Prada's Vice President Carlo Mazzi told Reuters in a phone
In a confirmation of its strong brand appeal, Prada achieved
its best performance in the European market, when it grew 57
percent in the three months to the end of April.
Asia, which makes up around 38 percent of sales, grew 47
percent while revenues in the United States rose by more than a
Retail is a big growth driver for Prada, which confirmed its
planned retail expansion of adding 260 stores in the next three
years, mostly in new cities.
Prada has a total of 402 directly operated stores, less than
bigger peers such as Louis Vuitton and PPR's
Gucci, Mazzi said.
Prada said net revenues climbed 47.9 percent, above
estimates. It added it would focus on cash-flow generation and
financial flexibility while cautioning on the crisis.
Net profit more than doubled to 121.7 million euros ($152
million) in the quarter, largely beating forecasts and showing
that the company's retail expansion in Asian markets paid off.
China's luxury market is poised to grow 18 to 20 percent
this year, outperforming the single-digit forecasts for Europe,
the Americas and Japan, according to U.S. consultancy Bain.
Listed in Hong Kong, Prada's shares have gained nearly 30
percent so far this year, easily outperforming the benchmark
Hang Seng Index's 1.3 percent gain.
Earnings before interest and tax (EBIT) rose 106 percent to
164.8 million euros, driven by retail sales, and lower
The luxury goods industry has enjoyed a strong recovery from
the 2008 financial panic that saw even the most affluent buyers
cut back on discretionary spending.
In March, Tiffany & Co cut its fiscal-year sales and
profit forecasts on economic concerns in China and the United
States, while Tod's and Brunello Cucinelli
have recently seen negative sales in recession-hit Italy.
(Additional reporting by Alison Leung in Hong Kong and; Sabina
Suzzi in Milan; Editing by David Holmes and David Cowell)