MILAN — Robust model momentum at Prada and Miu Miu helped mum or dad Prada Group report robust profitability and revenues within the first half, however its administration is eyeing additional growth in the long run, together with via the addition of recent classes and increasing into magnificence.
Group chief govt officer Andrea Guerra mentioned throughout a convention name with analysts on Thursday that the corporate was “extraordinarily pleased” with its license with L’Oréal and that, along with fragrances, Prada will “very quickly” prolong the settlement with “one other milestone – magnificence,” though he remained mum on particulars.
Prada’s license with L’Oréal got here into impact in January 2021, previous to which it was licensed to Puig. Prada did launch skincare in September 2020 below the earlier license.
Guerra additionally pointed to the significance of retail excellence, and pointed to the addition of jewellery in shops, in addition to artwork de la desk and residential collections.
The CEO, who joined the corporate in January, was upbeat all through the decision, touting the group as among the many greatest at school.
Within the six months ended June 30, group web revenue soared 62 p.c to 305 million euros, in contrast with 188 million euros in the identical interval final yr.
Revenues amounted to 2.23 billion euros, up 17 p.c in contrast with 1.9 billion euros within the first half of 2022. At fixed trade charges, gross sales rose 20 p.c.
Retail gross sales elevated 18 p.c to 1.97 billion euros, pushed by like-for-like full-price gross sales.
Wholesale revenues have been up 8 p.c to 194 million euros.
In the course of the name, Patrizio Bertelli, Prada Group chairman and govt director, attributed the efficiency to the manufacturers’ “desirability” and “robust identification” in addition to to “cautious and disciplined execution.”
He mentioned he was “proud of the standard of the expansion,” with “a strong” Prada and “vital development” at Miu Miu. He pointed to elevated retail and industrial investments within the yr, an acceleration of retailer renovations, and “higher management.” Bertelli trumpeted the acquisition of a minority stake within the “wonderful” cashmere producer Luigi Fedeli e Figlio with the Ermenegildo Zegna Group, as reported. In 2021, Zegna and Prada first joined forces to accumulate a majority stake in Filati Biagioli Modesto SpA, which specializes within the manufacturing of cashmere and different valuable yarns.
The group’s “globally balanced distribution permits us to seize progress regardless of ever-evolving business demand dynamics,” Bertelli continued. “We are going to stay vigilant and nimble, able to take care of completely different macroeconomic and demand eventualities that will materialize forward. Our manufacturers retain huge progress potential; our technique is evident, and our bolstered group is effectively geared up to execute.”
Within the first half, working revenue rose 61 p.c to 491 million euros in contrast with 305 million euros final yr, a margin of twenty-two p.c on gross sales.
Gross revenue gained 21 p.c to 1.79 billion euros, in contrast with 1.47 billion euros.
The second quarter, mentioned Guerra, “was one other constructive quarter on high of a stable” first quarter, though he admitted the yr was “unusual, remaining difficult month to month, and within the second half it could possibly be somewhat awkward.”
Regardless of the robust efficiency, Carole Madjo at Barclays mentioned the outcomes have been considerably blended as gross sales got here in barely under expectations, because the second-quarter gross sales have been 1 p.c lower than consensus. However in her report she famous that the working revenue was then again “a lot stronger,” an 8 p.c beat versus the consensus. The margin of earnings earlier than curiosity and taxes “reached a powerful 22 p.c vs. consensus at 20.1 p.c. We additionally word that the gross margin additionally improved considerably, reaching 80.3 p.c (vs. consensus of 78.6 p.c) notably helped by increased common value, constructive channel combine and scale.”
Luca Solca at Bernstein mentioned in his report that top-line progress was about 2 p.c wanting consensus estimates, underscoring the “divergent development” at Prada and Miu Miu, whereas “geographic development matches what we have now seen earlier, as LVMH and Richemont reported,” a slowdown within the Americas, whereas Japan and Asia Pacific lead. Working revenue in contrast is 7.5 p.c increased than consensus, marking “a fabric enchancment.”
Requested concerning the twin itemizing anticipated in Milan after Hong Kong in 2011, Guerra mentioned there was no replace. Chief monetary officer Andrea Bonini defined that “the technical points” have been accomplished. “We’ve achieved the work and examined the infrastructure, however this isn’t a precedence though it’s in our agenda. We at the moment are specializing in methods and the group of the group.”
Guerra underscored that the group’s “profitability additional elevated whereas we continued to consolidate our manufacturers’ desirability with increased investments. We’re nonetheless firstly of our strategic journey: We have to act with a long-term perspective, persevering with to take a position behind our manufacturers, sustaining most concentrate on retail execution and productiveness. For the present yr, we retain our ambition to ship stable, sustainable and above-market progress,” contemplating a tougher comp base within the third quarter and a few COVID-19 restrictions through the remaining quarter of final yr.
At fixed trade charges, within the first half retail gross sales of the Prada model grew 18 p.c to 1.66 billion euros, with a extra average however stable tempo in comparison with the 21 p.c improve of the primary quarter, on a excessive foundation of comparability, except China.
Miu Miu reported 50 p.c progress in retail gross sales within the semester to 285 million euros, with the second quarter up 57 p.c in contrast with 42 p.c within the first quarter, lifted by the upper publicity to China and Asia.
At group degree, gross sales of leather-based items have been up 12 p.c to 925 million euros; ready-to-wear rose 36 p.c to 609 million euros, and footwear gained 20 p.c to 374 million euros.
Guerra underscored that Prada logged in “one other nice six months,” highlighting how the model is a “cautious interpreter of cultural and social actions,” and that there are “by no means shortcuts” with this angle. He touted the “nice reception” of the autumn assortment over the previous 10 days and the model’s power with the purchase now, put on now provide.
“Miu Miu is admittedly reaching wonderful model momentum, with a pointy picture, a readable identification and all merchandise and classes are rising, leather-based items are enhancing, and the expansion is balanced globally,” mentioned Guerra. “We’re getting the crew prepared for future milestones and the evolution of Miu Miu.”
Guerra cautioned in opposition to evaluating Prada, designed by each Miuccia Prada and Raf Simons, with Miu Miu, which is helmed solely by the Italian designer, every with their “personal life, future and rising sample, and distinction in geographic protection.” Miu Miu, he mentioned, is extra uncovered to Asia, which led him to level to the extra alternatives for Prada in China particularly.
“After years of rethinking , repositioning and re-engineering Miu Miu” and rising over the previous 24 months, he believes there may be nonetheless a considerable alternative long-term.
Prada “stays on a sound trajectory and Miu Miu is reporting a remarkably robust efficiency, due to a strengthened identification and growing visibility,” he mentioned.
At present trade charges, within the first half retail gross sales in Asia Pacific gained 21 p.c to 716 million euros, due to the acceleration in mainland China, Hong Kong and Macao, boosted by the low foundation of comparability of 2022, when China was affected by the lockdowns in April and Could, lifted from June.
Japan was the best-performing area within the quarter, up 38 p.c to 224 million euros, benefiting from the group’s latest investments within the retail community, a strengthened group, stable home demand and growing tourism flows. Guerra famous that Japan has at all times been “very robust for Prada traditionally, working by itself, there may be nice love for the model.” He clarified that Prada is “not registering a adverse efficiency in China”; quite the opposite, “it’s having fun with a fast-growing sample, and proves there may be additional alternative for the model within the area.”
Group gross sales within the Center East grew 15 p.c to 92 million euros.
Retail revenues in Europe rose 20 p.c to 582 million euros regardless of the very difficult comparatives, pushed by wholesome native demand and excessive ranges of tourism.
Retail gross sales within the Americas amounted to 361 million euros, in contrast with 360 million euros in the identical interval final yr, though the North American shopper cluster continued to develop all through the semester, together with within the second quarter, Guerra mentioned, noting an enchancment within the U.S. now.
Bonini mentioned capital expenditures totaled 151 million euros within the first half, in contrast with 97 million euros in the identical interval final yr. Of this quantity, 27 million euros have been channeled into IT and 22 million euros in industrial investments, whereas the principle chunk was spent on the shop community and communication and advertising and marketing.
The group continued to put money into its retail community improve with round 70 renovation initiatives accomplished to raise buyer expertise and improve productiveness
Guerra in truth famous that administration was “clearly” eyeing working revenue progress, however touted the significance of investments and that he was extra centered on “fixed and wholesome, implausible revenues progress.”
Requested about owned model Church’s, Guerra mentioned “we have now restarted from scratch and restructured it over the past two years, closing shops and accounts that weren’t helpful and we now have a really clear positioning, with 25 to 30 shops and 140 to 150 wholesale accounts. We’ve been working actually exhausting and by the tip of the yr, we may have extra promising concepts and efficiency.”
Lorenzo Bertelli, advertising and marketing director and head of CSR, mentioned that the group has turn out to be a signatory of ZDHC Zero Discharge of Hazardous Chemical substances by 2024, it has launched an bold water conservation program, and introduced a brand new partnership with IOC-UNESCO for the Sea Past mission to develop coaching on ocean preservation. Prada Group is donating 1 p.c of Prada Re-Nylon assortment revenues.
As of June 30, the group’s web money place stood at 283 million euros.