Philippines’ Prada, Gucci retailer sees profit drop as luxury buyers seek discounts

SSI Group, the Tantoco family-led luxury and fast fashion retail giant, saw profits drop by over 27 percent during the first half of the year to P726 million as it ramped up spending on promotions and offered discounts, squeezing profit margins.

SSI, whose portfolio includes Hermes and Prada alongside relatively affordable labels Zara and Muji, booked sales of P13.2 billion, an increase of almost 7 percent during the period.

Luxury and casual wear sales registered growth. However, footwear and luggage, which had boosted its performance in past periods amid the revenge travel trend, declined during the first six months of the year.

Anthony T. Huang

SSI Group President, CEO 

Promos, discounts shave margins 

SSI said earnings dropped as profit margins dipped from 46.5 percent to 44.6 percent, due to increased promotional activities and discounting in response to a weaker demand environment during the first half of 2024. 

 Operating income fell significantly to P1.0 billion, with the operating income margin declining to 7.7 percent from 11.1 percent last year, reflecting the challenges in maintaining profitability amid aggressive promotions.

Despite these challenges, the company managed to expand its store network to 541 locations, covering over 109,000 square meters, and added five new brands, bringing the total to 94 by the end of June 2024.