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Prada Buys New York Fifth Avenue Store Building for $425 Million  

Prada products are seen at their store at the Woodbury Common Premium Outlets in Central Valley, New York, US, February 15, 2022. (Reuters)
Prada products are seen at their store at the Woodbury Common Premium Outlets in Central Valley, New York, US, February 15, 2022. (Reuters)
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Prada Buys New York Fifth Avenue Store Building for $425 Million  

Prada products are seen at their store at the Woodbury Common Premium Outlets in Central Valley, New York, US, February 15, 2022. (Reuters)
Prada products are seen at their store at the Woodbury Common Premium Outlets in Central Valley, New York, US, February 15, 2022. (Reuters)

Italian fashion house Prada has paid $425 million to buy the building on Fifth Avenue in New York which currently hosts its store, the company said on Wednesday.

Prada, which has been leasing its five-storey store at 724 Fifth Avenue since 1997, said it had paid the price in cash using internal resources.

"The board believes that the property's location offers high strategic value being characterized by increasing scarcity and long-term potential," Prada said in its statement.

It added that the property, a 12-floor building in total, could also provide office premises and storage for the Hong-Kong listed company, in addition to its retail space.

New York's Fifth Avenue is the world's most expensive retail street, according to a global ranking from real estate services firm Cushman & Wakefield.

The wider Americas region has been a weak spot for Prada this year, with retail sales falling by 1.3% during the first nine months, contrasting with double digit growth in the Asia Pacific, Japan and European markets.

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Fashion

Birkenstock Results Beat on Resilient Demand, Forecasts Margin Recovery

A Birkenstock shoe is displayed at Birkenstock shoe store in London, Britain, October 11, 2023. (Reuters)
A Birkenstock shoe is displayed at Birkenstock shoe store in London, Britain, October 11, 2023. (Reuters)
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Birkenstock Results Beat on Resilient Demand, Forecasts Margin Recovery

A Birkenstock shoe is displayed at Birkenstock shoe store in London, Britain, October 11, 2023. (Reuters)
A Birkenstock shoe is displayed at Birkenstock shoe store in London, Britain, October 11, 2023. (Reuters)

Birkenstock beat market expectations for fourth-quarter results on robust demand for its pricey footwear and forecast a recovery in margins in fiscal 2025, sending the company's shares up 7% on Wednesday.

With fresh styles becoming a priority for consumers, Birkenstock's sandals and closed-toe clogs have drawn new customers both at its own stores and at retailers.

The company bypassed steep discounting trends evident during the holiday shopping season, which Birkenstock executives said was off to a strong start globally.

"The expansion of ranges into more closed-toe silhouette has helped boost revenue, given that they offer multi-season wear," Susannah Streeter, head of money and markets at Hargreaves Lansdown, said.

Germany-based Birkenstock's average selling prices across its product range were up 8% in fiscal 2024, in part due to higher sales of clogs, the company said, adding that closed-toe styles now made up about a third of its business.

The company has invested in expanding its global store presence and increasing manufacturing capacity this year to meet demand.

While it led to a 330-basis point drop in gross margins in fiscal 2024, Birkenstock forecast a recovery in margins in fiscal 2025 as it ramps up production from new facilities.

The company reported fourth-quarter revenue of 455.8 million euros ($478.27 million), compared with the average analyst estimate of 439.2 million euros, according to data compiled by LSEG.

However, Birkenstock's forecast for fiscal 2025 revenue to increase between 15% and 17% was below estimates of 17.5% growth.

"It would appear with this incredibly healthy growth, the company is choosing to adopt a conservative approach that they expect to be able to meet and beat," BMO Capital Markets analyst Simeon Siegel said.

On an adjusted basis, Birkenstock earned 0.29 euro per share, beating estimates of 0.26 euro.