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Prada Group Hits 1B Euro in Quarter

MILAN — Prada Group just broke a barrier — and proved luxury is still on a roll.

The owner of Prada, Miu Miu and other brands on Thursday reported that for the three months ended March 31, revenues hit 1.06 billion euros, a 22 percent increase on the 876 million euros in the first quarter of 2022. It was the first time that Prada has generated quarterly sales of more than 1 billion euros.

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Prada joined peers such as LVMH Moët Hennessy Louis Vuitton, Hermès and Tod’s Group in registering double-digit growth for the quarter, a further indication that, while slowing in some markets, luxury brands are maintaining the momentum they saw throughout 2021 and 2022, helped by the reopening of China after the lifting of pandemic-instituted lockdowns.

“By definition, this is a solid start of the year, which is good psychologically and operatively,” said Prada Group chief executive officer Andrea Guerra.

Andrea Guerra
Andrea Guerra

Speaking during a call with analysts on Thursday to comment on the group’s first-quarter sales figures, he had reason to sound upbeat, adding that he was also “happy with the April numbers.”

The retail channel contributed to the bulk of the group’s business, up 22 percent in the first quarter to 953 million euros, with like-for-like sales up 23 percent.

Pointing to the latter, Guerra praised the team for “their discipline, routines, CRM tools, clienteling and retail activities.” That said, to achieve an even “stronger retail balance,” he admitted it was “a long journey.”

“We closed a first quarter of solid growth, across all product categories and geographies, and we continued to consolidate our brands’ desirability,” Prada Group chairman and executive director Patrizio Bertelli said in a statement.

To be sure, compared with the same period in 2022, retail sales of the Prada brand increased by 21 percent at constant exchange rates to 813 million euros, representing 85 percent of the total. Miu Miu accelerated, climbing 42 percent to 129 million euros.

Prada

“The global context we operate in continues to be complex and ever-changing, but our strategic priorities are clear, our organization stronger, and the group remains reactive,” Bertelli continued. “We look at the future with confidence, determined to continue our path of stable and sustainable growth.”

In the period, wholesale revenues grew 9 percent to 91 million euros, while royalties rocketed 52 percent to 21 million euros, driven by the eyewear and fragrance licenses.

Guerra cited a “solid” rebound in Asia Pacific and noted that “over the course of the first quarter, China returned to be an engine of growth.”

Retail sales in Asia Pacific climbed 22 percent to 360 million euros. China showed a further year-on-year acceleration toward the end of the quarter supported by easier comparables. Business also continued to experience solid growth in Southeast Asia. Guerra said he is not seeing signals of deceleration.

He also pointed to “some rebound in Europe by Chinese consumers,” but that a “strong rebound is expected in the second half in Europe” from this cluster of consumers.

“Our priority for the year remains increasing store productivity, focusing on retail execution,” Guerra said. “Meanwhile, we will continue to invest behind our brands, our stores and our infrastructure for the growth of tomorrow. The ever-evolving macro and market backdrop requires us to be vigilant, but we see benefits in accelerating these investments, if conditions remain supportive.”

Retail sales in Europe rose 26 percent to 259 million euros, driven by tourism and local consumption.

Growth in the Americas stood at 10 percent to 174 million euros, and the company pointed to a challenging comparison basis. “Americans are keeping up, but they are not as dynamic as they have been, and they are buying in Europe taking advantage of currency and tax returns, but I don’t see any weakening [in demand]. I am not worried,” Guerra remarked.

Revenues in Japan rose 44 percent to 113 million euros, benefiting from the group’s recent investment in the retail network, solid domestic demand and increasing tourism flows.

Retail sales in the Middle East rose 20 percent to 47 million euros, although in moderation versus the previous quarter.

Prada Fall RTW 2023
A top-handle handbag from Prada’s fall rtw 2023 collection.

The leather goods category grew 14 percent at constant exchange rates to 434 million euros, accounting for 46 percent of the total, and driven by both new and iconic lines.

Ready-to-wear remained the fastest-growing category, increasing 38 percent to 316 million euros, accounting for 33 percent of the total. Retail sales of footwear rose 20 percent to 176 million euros.

Guerra said he was “happy with the product mix,” and that Prada’s growth in the ready-to-wear category was “a success,” but pointed out that its leather goods are “a symbolic part of its history and future. The brand is agile with drops and novelties but also a patient developer of iconic products that are paying off well. Selling leather goods has to be an obsession.”

“Prada is very, very desirable,” said Guerra, and recent launches such as that of the Eternal Gold jewelry, have been “very important,” with a number of dedicated moments, such as a two-week event in Shanghai at the brand’s Rong Zhai restored mansion, that helped to “spend quality time with clients.”

He touted Prada’s “natural positioning, able to deliver to the highest luxury [range] and to the more lifestyle world.” Guerra also noted that the brand’s menswear segment has been growing steadily. As reported, Gianfranco D’Attis joined as Prada CEO in January.

Miu Miu is also “well-positioned, naturally and instinctively as a very contemporary” brand targeting “a younger audience, “enjoying quite a successful community-based experience,” Guerra continued. Ready-to-wear and shoes have always been strong categories, and leather goods are now increasingly becoming “a pillar” also through the launch of the new “Pocket” bag.

Miu Miu RTW Fall 2023
Miu Miu RTW Fall 2023

Guerra praised the Miu Miu team, which is led by CEO Benedetta Petruzzo. “They have done a great job, working really hard in the past 12 to 36 months, and the brand is well-received, visible and [enjoying] a much bigger retail success.”

Asked to comment on the eventual dual listing, chief financial officer Andrea Bonini said he was “not in the position to provide an update on the timing.”

Bonini said full-price sales drove the group’s business. In 24 months, the company closed almost 20 off-price stores and the plan is to close 30 additional ones in a couple of years.

Guerra underscored that, while “uncertainty is the rule,” the goal is “to be more agile and quicker to react, with the ambition to deliver growth above average. We have to do this and will keep on trying to do this.” He also said the company is in a position to accelerate its investments, in brand communication, store refurbishments and new platforms. The executive also hinted at “some pricing opportunities” in the upper range of the spectrum.

Asked about Church’s, whose sales decreased 21 percent to 6 million euros, Guerra said he will approach this topic “in the next two or three quarters. We are working hard and doing our homework on product positioning, stores, people and motivation. It’s a valuable brand, an important addition in the mid- to long-term,” not a volume driver.

Paolo Zannoni on Thursday was appointed executive deputy chairman and Yoël Zaoui was named lead independent director.

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