HONG KONG (Reuters) - Shares of Prada SpA (1913.HK) fell more than 6 percent to a record low in Hong Kong trading on Wednesday after the Italian luxury goods maker reported a plunge in profit, weighed down by slumping sales in Greater China where economic growth slowed.
A strong Hong Kong dollar - which is pegged to the U.S. dollar - has also made the former British colony an expensive destination for cash-rich mainland Chinese shoppers, who are looking increasingly to places such as Japan and South Korea.
Prada posted a 38 percent profit plunge in August-October on Tuesday. The company said it would reduce price gaps for its products across regions to discourage tourists from traveling to countries where goods can be bought more cheaply.
It will also consider selective shop closures in the coming year and limit the number of openings to 10 to protect margins.
"We believe they will need to reduce average prices in Asia as well. We do not expect outright price cuts on all existing products, but new products to be introduced at lower prices," said Aaron Fischer, head of consumer and gaming research at CLSA.
The stock slid to as low as HK$24.85, the lowest level since the company listed in June 2011, and down nearly 40 percent from its IPO price of HK$39.50. Prada's shares lagged a 2 percent rise in the benchmark Hang Seng Index (.HSI).
Luxury goods companies, which had banked on China for years to drive growth, have taken a hit in the world's second-largest economy as an economic slowdown and a crackdown on corruption and conspicuous spending take a toll.
(Reporting by Donny Kwok and Farah Master; Editing by Anne Marie Roantree and Ryan Woo)