Italian luxury goods group Prada said it will be opening fewer stores than previously planned this year after reporting a 21 per cent fall in its first-half net profit.

The company said it did not see significant improvements in the luxury market in the coming months and forecast a second half broadly in line with the first six months to end-July, without specifying if it was referring to sales or profit.

In April Prada said it expected to see growth in sales this year in the 'high-single' digits.

'We will have net openings of 65 stores against 80 planned,' Prada's chief financial officer Donatello Galli said.

The move is part of a cost-cutting effort aimed at protecting margins at the fashion house, which in the six months to end July posted a 20.6 per cent drop in net profit to 244.8 million euros. Net revenues gained 1.3 per cent to 1.75 billion euros.

The maker of luxury leatherware and Miu Miu-brand dresses said it was hit by sluggish consumer demand amid an uncertain economic outlook and unfavourable exchange rates.

It also suffered from a mismatch between customers' demand and the products available in stores, Galli said, adding that some organisational changes were underway to tackle the problem that had affected mainly the leather goods segment.

'You will see the positive effects of these (changes) from mid-November,' he said.

Net sales for leatherware, which accounts for almost 70 per cent of revenues, fell 5 per cent year-on-year in the first half. Sales in the footwear and ready-to-wear segments were up 19 per cent and 14 per cent respectively.

Cost-cutting and organisational changes should marginally improve Prada's gross margin by the end of the year, Galli said.

The company also suffered from weak retail sales in some countries in the Asia Pacific area such as Korea, Hong Kong and Singapore, once considered the growth engine for the luxury goods business.-Reuters