MILAN — “When model desirability is coupled with enterprise efficiency, we’re glad,” mentioned Prada Group chief government officer Andrea Guerra.
“The hardest quarter when it comes to comparability is over and we had been in a position to path our journey with out bumps,” mentioned Guerra addressing analysts throughout a name on Tuesday to touch upon the group’s outcomes.
Within the nine-month interval ended Sept. 30, gross sales elevated 12 p.c, reaching 3.34 billion euros in contrast with 2.97 billion euros in the identical interval final 12 months. At fixed alternate charges, gross sales grew 17 p.c.
Guerra mentioned he was additionally happy with the efficiency of the group in October.
The manager pointed to “additional progress towards retail excellence with 11 quarters of uninterrupted full-price, like-for-like gross sales development.” He admitted macroeconomic and geopolitical turbulence and pressure created uncertainty, which can lead the group to deal with even higher execution — “extra centered and exact,” he mentioned.
Regardless of that turbulence, Guerra and chief monetary officer Andrea Bonini insisted all through the decision that the group’s funding technique is not going to change in 2024. “We’re prepared for the tremendous vacation interval and we plan to maneuver on and proceed to speculate, brick after brick, on our retail excellence journey,” Guerra mentioned. “We proceed to develop above trade common, and we hope to conclude 2023 as one other strong 12 months.”
Model momentum stays sturdy for Prada and Miu Miu.
“Our technique delivered strong development within the first 9 months of 2023, together with within the third quarter, however the very difficult foundation of comparability,” mentioned chairman and government director Patrizio Bertelli, who was not on the decision, in an announcement. “The group continued to consolidate its manufacturers’ desirability and accelerated investments as deliberate. Wanting forward, we’re centered on enhancing innovation and dynamism, drawing on the power of our strengthened group, and on retaining the pliability that characterizes our group.”
Within the 9 months, group retail gross sales rose 12 p.c to 2.97 billion euros, and the wholesale channel reported a 4 p.c achieve to 291 million euros. Within the third quarter, wholesale was up 10 p.c on a really difficult foundation of comparability, because the achieve in the identical interval final 12 months was of 32 p.c.
Within the 9 months and at fixed alternate charges, retail gross sales of the Prada model elevated by 13 p.c to 2.5 billion euros, representing 84 p.c of the full, pushed by full-price like-for-like gross sales. Within the third quarter, gross sales of the Prada model rose 5 p.c, extra average on a really difficult comparability foundation, significantly in Europe, famous Guerra.
Within the 9 months, Miu Miu revenues climbed 49 p.c to 446 million euros. “With this sort of efficiency, we have to be humble, there isn’t any place for complacency, and we should preserve our journey straight going ahead,” cautioned Guerra. Responding to an analyst, he additionally underscored that it’s “Miu Miu catching up and never Prada slowing down.”
Bonini mentioned that when it comes to working revenue margins “the hole with Prada is narrowing.”
He famous that the corporate’s efficiency within the interval was impacted by destructive foreign money headwinds of 444 foundation factors.
Bonini didn’t touch upon the year-end consensus, however mentioned the group is “well-positioned with the ambition to keep up above-market development for the 12 months and we retain our aims for 2024.” Guerra echoed this stance, saying that the group is “well-positioned for the fourth quarter.”
Bernstein’s Luca Solca mentioned Prada has “vital optimistic momentum,” noting that the ten.3 p.c natural development within the third-quarter gross sales was barely above consensus by 0.6 p.c. “An additional channel shift to retail (up 10.4 p.c) and away from wholesale (down 1.2 p.c) factors to additional optimistic progress in controlling distribution. Prada is firmly among the many prime corporations within the sector relating to prime line development development year-to-date,” particularly pushed by Miu Miu and ready-to-wear, rising considerably forward of the Prada model and leather-based items. “We marvel if the development within the third quarter of 2023 Prada has posted will likely be sufficient to help the inventory, as markets are nervous concerning the estimated full 12 months 2024 uncertainty for the sector, and have reacted very negatively even to very small destructive surprises.”
Costs elevated 4 to six p.c in 2023, and certain present an analogous improve subsequent 12 months, Guerra mentioned.
Through the name, no point out was made from Church’s, however the group’s presentation confirmed that the shoe model posted a 19 p.c lower to 19 million euros — representing merely 1 p.c of the full. Within the third quarter, the primary Church’s x Miu Miu collaboration was launched.
Within the 9 months, gross sales of pastry store and restaurant Marchesi and people of Automobile Shoe rose 19 p.c, to 14 million euros.
Royalties soared 67 p.c to 73 million euros, pushed by eyewear, licensed to Luxottica, “a brilliant enterprise,” mentioned Guerra, and fragrances, by way of a license with L’Oréal.
Prada has simply launched a make-up and skincare line, which is garnering “outstanding response,” and “nice development” is anticipated from the class within the subsequent two to 3 years, Guerra mentioned. Requested about different potential product extensions, Guerra mentioned there are not any plans for extra licenses.
Asia Pacific progressed effectively over the primary 9 months of 2023, reporting a 15 p.c improve in retail revenues to 1.04 billion euros, or a 21 p.c achieve at fixed alternate charges, on a unstable foundation of comparability, which noticed vital disruption within the second and fourth quarters final 12 months. Hong Kong and Macao confirmed the very best development, Bonini mentioned.
Gross sales in Europe elevated 13 p.c to 941 million euros due to native and vacationer demand regardless of a really difficult foundation of comparability. “The efficiency within the third quarter remained optimistic, with strong underlying demand, albeit with extra average year-on-year development, as anticipated,” the chief mentioned.
Guerra mentioned the spending of the European cluster is “clearly extra regular in contrast with the identical quarter a 12 months in the past, but the third quarter was actually, actually strong. I might say issues turned to regular versus two or three years in the past, however for certain in some cities previously weeks there was extra pressure for the macro political scenario, however now we have not seen primary variations up to now.”
Revenues within the Americas had been down 3 p.c to 536 million euros with what the corporate known as “a gentle sequential enchancment” within the third quarter in contrast with the second quarter.
Japan remained the best-performing area, with sustained development all through the interval and gross sales gaining 34 p.c to 334 million euros, largely pushed by native demand. At fixed alternate charges, revenues rose 47 p.c in that market, boosted primarily by native spending, however Guerra famous that there was a progressive improve of vacationers, particularly from China, previously three to 5 months — though the degrees of pre-pandemic tourism “continues to be a good distance away.”
The Center East delivered a strong efficiency, exhibiting a ten p.c improve to 125 million euros.
By class, ready-to-wear was the quickest rising, exhibiting a 32 p.c improve to 923 million euros within the 9 months, or 31 p.c of the full.
Leather-based items, nonetheless the largest contributor to the group, accounting for 47 p.c of complete gross sales, was up 8 p.c within the 9 months to 1.4 billion euros, and up 1 p.c development within the third quarter. Prada has been specializing in signature luggage, such because the Galleria, whereas launching new designs, and Miu Miu has additionally shone gentle on the Arcadie and Wander luggage.
Requested concerning the slowdown within the class, Guerra mentioned the leather-based items market noticed “an unbelievable dimensional improve” on this enterprise within the 2020-22 interval, as a result of pandemic and social distancing, however now “leather-based items are [generally] taking a type of a breather, however we’re glad. Might now we have executed higher? All the time, however this is likely one of the greatest outcomes of the quarter and we proceed to maneuver on, nothing is decelerating, now we have a powerful portfolio of merchandise going ahead,” he trumpeted.
He provided that “the primary dialog needs to be concerning the entry worth to be extra aggressive, to realize a wider vary of costs going upward, however the prime of vary wants substance for desirability and long-term worth.” He believes there was a shift available in the market the place the main focus is fashion and design, and never the value, he mentioned.
Footwear was up 16 p.c to 556 million euros, lifted by each sneakers and formal sneakers.