Prada Group beat the luxury crisis

At a time when the industry giants, LVMH and Kering, are suffering from a slowdown in their performance, the Prada Group, which includes the Prada and Miu Miu brands as well as Church's, Car Shoe, Pasticceria Marchesi, and Luna Rossa, reported an excellent financial performance in the first nine months of 2023 with strong revenue growth to 3.34 billion euros. This represents a remarkable 12 percent increase over the same period last year, when the company generated 2.97 billion euros. Considering constant exchange rates, sales growth is even more impressive, reaching 17 percent. Prada Group President and Chief Executive Officer Patrizio Bertelli attributed this solid growth to the company's strategic efforts in improving brand desirability, accelerating investment and maintaining organizational flexibility. Despite the challenging comparison base, the Prada Group managed to maintain its upward trajectory. In the nine months ending September 30, 2023, the Prada Group's retail sales increased 12 percent to 2.97 billion euros. In addition, the wholesale channel reported a 4 percent increase, amounting to 291 million euros. In particular, in the third quarter, wholesale sales increased by 10 percent, despite a difficult comparison base, which had reported a 32 percent increase in the same period of the previous year.

In terms of product categories, ready-to-wear was the fastest growing segment, registering a 32 percent increase in the nine months to 923 million euros, or 31 percent of total sales. Leather handbags, still the largest contributor to the group with 47 percent of total sales, grew 8 percent to 1.4 billion euros. Footwear also showed strong growth, up 16 percent, driven by sneakers and formal shoes. Individual brands within the Prada Group also showed impressive performance. Retail sales of the Prada brand increased 13 percent in the nine months to 2.5 billion euros, making up 84 percent of total sales. Full-price sales as the driving factor behind this growth. Miu Miu, the other key brand, posted a remarkable 49% increase in revenues, reaching a total of 446 million euros. Royalties increased significantly by 67 percent to 73 million euros. This growth can be attributed to the company's sunglasses business, licensed to Luxottica, and fragrances, through a licensing agreement with L'Oréal. In addition, Prada's recent entry into the makeup and skincare business has garnered a remarkable response, with the expectation of substantial growth in the coming years.

The Prada Group's success is not limited to a single market, but extends to several regions. In particular, the Southeast Asian region recorded a 15 percent increase in retail revenue, reaching 1.04 billion in the first nine months of 2023, which becomes a 21 percent increase. Considering constant exchange rates, the growth was even more pronounced, reaching 21 percent. Sales in Europe increased 13 percent to 941 million euros despite a difficult comparison base. The region saw solid underlying demand, particularly in the third quarter. Although revenues in America declined 3 percent to 536 million euros, the third quarter showed a slight sequential improvement over the second quarter. Japan remained the best performing region, with sales up 34 percent to 334 million euros, which is 47 considering constant exchange rates. While the Middle East showed a solid performance, with a 10 percent increase, reaching a total of 125 million euros.

Prada Group's strong financial performance in the first nine months of 2023, despite challenges such as geopolitical and economic uncertainties, positions the company well for the future. CEO Andrea Guerra stressed that the company remains committed to its 2024 strategy and its path of retail excellence. He expressed confidence in the Prada Group's ability to maintain above-market growth and solid performance in the coming years. Along with the Group, other conglomerates are demonstrating strong resistance to the luxury crisis that is instead affecting the two French titans of the Arnaults and Pinaults: Hermès, the Zegna Group, Moncler, and Hugo Boss-an outcome that seems, at least for now, to mark the advantage of the more classic, "specialized" and sartorial brands with a particular eye, in the case of Boss, on the right mix of product elevation and accessibility.