Prada Defies Luxury Slowdown as Miu Miu Sales Surge 82%

Prada Group’s retail sales accelerated at year end, rising 17 percent in the fourth quarter, the Milanese fashion giant reported Thursday. Analysts had predicted 14 percent growth.

Retail sales at flagship label Prada grew 10 percent while sister label Miu Miu posted explosive growth: fourth quarter sales jumped an eye-popping 82 percent.

For the full-year, net revenues rose by around 12 percent to €4.73 billion, breezing past the mid-term target of €4.5 billion set out by management in 2021. Operating profit rose 37 percent, surpassing €1 billion for the first time.

Executive chairman Patrizio Bertelli cited Prada’s “well-balanced product portfolio and major capability to innovate and interpret contemporary style” as driving growth, while Miu Miu had “a year of great success in consolidating the brand’s image and appeal.”

Prada’s fashion prestige has steadily risen since going global with its nylon rucksacks and ready-to-wear collections by owner-designer Miuccia Prada in the early 1990s. But the business stagnated for nearly a decade as a craze among Chinese customers for its Galleria handbag fizzled. In 2022, revenues climbed back above their 2013 peak for the first time after Miu Miu saw a surging interest in its newly striking, skimpy silhouette and as Prada re-merchandised its core wardrobe, complementing its directional runway looks with easy-to-wear daytime pieces.

Prada’s continued growth in a wider luxury market that’s slowed significantly after a post-pandemic boom could smooth generational change at the company: a new group CEO (Andrea Guerra), CFO and Prada brand- CEO have been brought in to help ease the succession of longtime leaders Patrizio Bertelli (now executive chairman) and Miuccia Prada, who plan to eventually pass the baton to their eldest son Lorenzo. Mrs. Prada has worked in tandem with a co-creative director, star designer Raf Simons, since 2020.

Bertelli sounded a confident note on the group’s outlook, citing confidence in the new hires as well as investments in supply chain and stores. “Innovation, dynamism and flexibility are always important in today’s market and I’m confident that our strengthened organisation will drive us toward further growth and evolution,” he said.

The news that the Italian group has continued to beat the market suggests that growing consumer fatigue with logo-ed products applies unevenly across brands and market segments: the lion’s share of Prada’s product remains emblazoned with its inverted triangle motif or the bubbly lowercase Miu Miu mark. Louis Vuitton, too, proved resilient last year while many logo-driven brands with higher exposure to aspirational customers, like Capri’s Versace and Kering’s Gucci and Saint Laurent, slowed.

At Prada, dependence on entry-level luxury consumers — whose interest in luxury fashion has cooled amid a slowing economy and the return of travel and restaurants following the end of coronavirus restrictions — was a key risk. But efforts to rebalance the business to capture a higher-end customer, insulated from macroeconomic shocks and able to buy more deeply into collections, appear to have paid off.

Still, Prada flagged uncertainty for the year ahead: Sales to long-haul tourists continue to rise (with Americans travelling at a significantly higher rate than before the pandemic, while Chinese tourism rebounds more gradually) but rising geopolitical tensions could threaten the key travel retail channel. Macroeconomic uncertainty and a higher basis of comparison after three years of rapid growth could also pose a challenge. “2024 can be a year of some acceleration, some deceleration, some ups and downs,” Guerra said.

As the luxury market slows overall, the brand may need to focus on gaining market share from competitors through further investments in marketing and retail, Guerra added. The group’s retail footprint is likely to grow this year, principally through expanding stores in key locations rather than increasing the number of doors.

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