Yahoo Finance Miu Miu Helps Drive Double-digit Revenue Growth at Prada
Updated on July 30 at 12:55 p.m. ET
LONDON — Prada Group defied the slowdown in luxury, delivering double-digit profit and revenue gains in the first fiscal half, powered by a surge in sales at Miu Miu that outstripped analysts’ expectations.
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And the group plans to keep its foot on the accelerator — especially at Miu Miu.
Andrea Guerra, the group’s chief executive officer, said the first-half growth was due to the “desirability” of the Prada and Miu Miu brands.
But it’s more than just that. Guerra, who joined Prada Group last year, has also put a strong focus on retail space productivity, which has traditionally been low compared with Prada’s competitors and a fraction of that of Hermès, Louis Vuitton and Dior.
Guerra has also been keeping a beady eye on like-for-like growth, and pushing the teams to prioritize customer relationship management, or CRM, clienteling, and increased customer outreach, according to analysts.
Lorenzo Bertelli, group marketing director and head of corporate social responsibility, has been supporting Guerra’s strategy.
He said that Prada’s and Miu Miu’s performance was down to “hard work and learning from past mistakes,” rather than any particular product, or products. He also said the group has been making a big effort “to return to the DNA of Prada, and of Miu Miu in particular” to drive growth.
Guerra said that building up Miu Miu has been a priority, and that despite steady growth over the past 30 years, the brand — which originally launched as a lower-price secondary line — still needed “the necessary structures and infrastructures” to evolve.
This year the plan is to increase Miu Miu retail space by 10 percent, and to achieve “growth without shortcuts,” Guerra said.
In the six months to June 30, the owner of Prada, Miu Miu, Church’s and Car Shoe posted a 26 percent uptick in net income, year-on-year, to 383 million euros. EBIT, or earnings before interest and taxes, climbed 17 percent to 575 million euros.
Revenues rose 14 percent to 2.55 billion euros at actual exchange rates. At constant exchange rates, revenues were up 17 percent in the six-month period.
Retail sales climbed 15 percent to 2.26 billion euros at reported rates, and 18 percent at constant exchange. Retail sales at Miu Miu rose 93 percent, outstripping growth at Prada, which was 6 percent in the six-month period.
Patrizio Bertelli, Prada Group chairman and executive director, called the first-half results “solid” and said they reflected the “disciplined execution” of the group’s strategy.
“We are satisfied with the above-market performance and high-quality, like-for-like growth trajectory that we have achieved in an increasingly uncertain market environment,” he said.
Bertelli added that the group, which is publicly listed in Hong Kong, was undaunted by the future. “The flexibility of our organization gives us confidence in the group’s ability to navigate the months ahead as we continue to invest across our business,” he said.
Guerra said the company has delivered 14 consecutive quarters “of high-quality, like-for-like growth,” with a positive second quarter building on a solid start to fiscal 2024.
Still, he’s not resting on his laurels.
“In the current macroeconomic and geopolitical context, industry dynamics have become more challenging; this requires us to be agile and sharp on our product range, communication and overall positioning, to continue to drive client engagement and to progress in our journey towards retail excellence,” Guerra said.
“While being vigilant, we remain committed to our strategy and to our ambition to deliver solid, sustainable and above-market growth,” he added.
The group’s growth is in marked contrast to its peers, including Kering, LVMH Moët Hennessy Louis Vuitton and Burberry. Those brands have suffered a slowdown in sales and profit growth over the past year due largely to waning demand in mainland China.
By contrast, Prada Group performed well across all regions, including Asia Pacific, where revenue rose 12 percent in the six months.
The group noted that growth in Asia Pacific moderated in the second quarter against a backdrop of tougher comparisons “and increasing spending outside the area,” a reference to robust trading in Japan.
Almost all luxury groups are seeing sales soar in Japan, where wealthy Chinese tourists have been taking advantage of the weak currency.
Japan was the best–performing region for Prada, with sales climbing 55 percent “supported by healthy local demand and strong tourism flow,” the group said.
Sales in Europe were up 18 percent, driven by domestic and tourist spending. The Americas region grew 7 percent, with the second quarter registering a “slight sequential improvement,” according to the company.
In the Middle East sales rose 20 percent, “despite persisting geopolitical tensions in the region.”
Guerra said the second half has had a strong start with “no slowdown” in sight. Sales trends in July followed those of the first six months with China “only slightly down.”
He also put Prada Group’s growth into wider context. Guerra said the luxury industry “has gone through a decade of unbelievable growth,” with brands benefiting from strong tailwinds. Over the past 18 months, it has entered a period of “more balanced growth.”
Against that backdrop, he believes Prada is gaining back market share despite price increases of around 4 percent over the past year.
Bernstein’s Luca Solca said that in the second quarter, Miu Miu was 30 percent ahead of consensus with growth of 95.4 percent, while Prada was 1 percent below consensus, growing at 4.6 percent. Group EBIT in the first half was 4 percent ahead of analysts’ expectations.
Citi’s Thomas Chauvet called Miu Miu’s growth “supercharged,” and said the second-quarter group sales were “solid.” He added that EBIT in the half was around 5 percent ahead of consensus in what has been a “highly polarized and volatile” reporting season in an “out-of-favor sector.”
Although Miu Miu has been around since 1993, the brand has gained significant momentum in recent years, particularly in the Chinese market where the clothing is favored by socialites, and has cross-generational appeal.
The brand, which is designed by Miuccia Prada, regularly tops the quarterly Lyst Index of hottest brands. Earlier this month, however, it was knocked off its number-one perch by Loewe.
It’s not just the C-suite managers that have been building Miu Miu into a power brand. The group’s creative teams — and particularly Miuccia Prada — have been working hard to keep Miu Miu sophisticated, fun to wear and zeitgeist-y.
In May, Miu Miu dipped its toe into the Cannes scene, inviting Cara Delevingne, the model, actress, West End performer and face of the brand’s fall 2024 ad campaign, to host a day at the beach with the brand’s Summer Club.
“I’m just such a fan,” the model and actress said of Miuccia Prada, as she held court on a sun lounger while strong waves crashed against the rocks.
“She is one of the most incredible inspiring women, just her energy, the way she lives her life, and the way she works. I think having women like her in the fashion industry, and in any industry, is just such a gift. To be able to know her, to be able to work with her for years is a dream,” Delevingne said.
In June, Miu Miu launched a new project called Summer Reads, which takes place Fridays and Saturdays in key cities around the world: Milan, Paris, London, New York, Seoul, Shanghai, Hong Kong and Tokyo.
As part of the project, the Italian brand has taken over newsstands, or newly constructed locations, and has been gifting visitors copies of classic works by women authors such as “Forbidden Notebook” by Alba de Céspedes; “A Woman” by Sibilla Aleramo, and Jane Austen’s “Persuasion.”
The initiative followed the launch of Miu Miu’s Literary Club “Writing Life,” a two-day event that swung the spotlight onto works by Aleramo and De Céspedes during the Salone del Mobile in Milan in April.
Miu Miu Women’s Tales, a series of short films, was introduced in 2011, and has allowed women directors to speak up and offer their points of view. It remains one of the only consistent, commissioning platforms exclusively for female filmmakers.
As reported, Miu Miu was the hottest brand of 2023, according to Lyst. It was the second time that Miu Miu took home the title, with wins based on 200 million fashion shoppers in the 12-month period.
Lyst said that in 2023 searches for the brand increased 39 percent year-over-year, thanks to “another slew of viral products, celebrity-packed runway moments, hyped collaborations with New Balance and Church’s, and buzzy campaigns starring ‘It’ girl after ‘It’ girl, from Emma Corrin and Kendall Jenner to Gigi Hadid and Ethel Cain.”
Lyst noted that the brand also pushed searches for cashmere cardigans up 12 percent one month after its “librarian-core” fall 2023 show. Global demand for its ballet flats, meanwhile, increased 75 percent between March and September 2023.
In Asia, the brand has orchestrated a web of buzzy celebrities as brand ambassadors to funnel Miuccia Prada‘s runway ideas into appealing looks for luxury customers who might not be familiar with stars such as Corrin.
In China, the brand is always dressing emerging starlets such as Lexie Liu, Zhao Jinmai and Qiu Tian, as well as established ones such as Dong Jie and Kara Wai. For the brand’s fall 2024 show, Miu Miu even invited Qin Huilan, a doctor-turned-Prada superfan, to walk for the brand alongside Kristin Scott Thomas.
Miu Miu’s most significant point of regional influence is in South Korea, where it harnessed the global impact of K-pop by tapping Momo Hirai, a Japanese member of the girl group Twice, as a brand ambassador.
Girl group (G)I-dle’s member Nicha Yontararak from Thailand, better known as Minnie, and girl group IVE’s member Wonyoung Jang, who is of Chinese descent, are Miu Miu brand ambassadors as well.
Bernstein’s Solca noticed earlier this year that that Miu Miu has risen swiftly in China’s social media boxing ring, “notably excelling on user-generated platforms such as Xiaohongshu and WeChat.”
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