Italian fashion group Prada has reported better-than-expected revenues in the first half of the year, with total revenues rising by 66% at constant exchange rates to reach €1.5 billion ($1.78 billion), just shy of pre-pandemic levels in the first half of 2019. This surpassed analysts’ consensus estimate of €1.43 billion. Prada’s CEO, Patrizio Bertelli, expressed confidence in the continuation of the sales momentum throughout the year and announced plans for a capital markets day in autumn.
The COVID-19 crisis disrupted Prada’s sales recovery, which had been driven by a revamp plan focusing on enhancing e-commerce and maintaining full-price sales. Like other luxury brands, Prada began to see signs of a rebound last summer as restrictions in the Chinese market eased. With the easing of lockdown measures worldwide, the luxury sector has experienced a strong recovery, with many key players surpassing their 2019 revenue levels.
Though one-sixth of Prada’s stores remained closed in the first half of the year, sales from its store network increased by 8% compared to the same period in 2019, reaching €1.281 billion. The company noted a significant acceleration in sales during the second quarter. While Asia and the Americas have exceeded pre-pandemic levels, European revenues still lag behind by 29%, largely due to longer store closures in the region. Prada revealed that sales partially recovered after store reopenings, with strong demand from local customers offsetting the absence of tourists.
Prada’s e-commerce segment has witnessed exceptional growth, with sales increasing by 100% or more compared to the previous year. Online sales now account for 7% of retail revenues. By focusing on full-price sales and implementing strict cost controls, Prada achieved positive earnings before interest and taxes (EBIT) of €166 million. This marks a significant improvement from the €196 million loss incurred in 2020 due to the pandemic. The positive EBIT exceeded analysts’ consensus estimate of €143 million and also exceeded the €150 million operating profit achieved in the first half of 2019.
Prada’s robust performance in the first half of the year, coupled with its positive outlook for the second half, showcases the brand’s resilience and adaptability in the face of challenges. The company’s emphasis on e-commerce, full-price sales, and cost control strategies has proven effective in driving growth and profitability. As the global economy continues to recover and consumer confidence returns, Prada is well-positioned to capitalize on the rebound in the luxury fashion market.
Useful links:
1. Prada Official Website
2. Business of Fashion
