Italian fashion house Prada SpA has sealed a deal to acquire the building housing its flagship store on the Fifth Avenue in New York, one of the world’s premier shopping streets. The transaction, totaling $425 million, reflects Prada’s confidence in the unwavering demand from American consumers, undeterred by inflation and high borrowing costs.
Prada has leased its store in the 12-story building located at 724 Fifth Avenue since 1997, as stated in Wednesday’s stock exchange announcement. The company emphasized the high strategic value of the property, especially following increased investments in residential, hospitality, and retail sectors in the area. The group intends to continue utilizing the space for its store, offices, and warehouse.
Despite global economic slowdown concerns, retail sales in the US have shown unexpected growth in November, reaching the highest level since April 2022. While analysts anticipate a slight slowdown in growth rates in 2024 due to household savings reduction and worsening credit conditions, the country’s expenditures remain robust compared to China. The real estate market crisis in China has led consumers to tighten their belts, with Chinese buyers increasingly favoring spending on experiences like food and beverages rather than luxury handbags.
Prada experienced a slowdown in sales in the third quarter, with net revenue falling short of analysts’ expectations at 1.11 billion euros (1.18 billion dollars). The sales growth of the Prada brand, constituting over 80% of total sales, decelerated to 5% in the quarter compared to 15% in the previous one.
