Miu Miu growth helps Prada to defy luxury downturn

Prada reported a 9 per cent increase in first half net revenues at constant currencies on Wednesday (Jul 30), with its smaller but fast expanding Miu Miu brand helping it to buck a weak sector trend.

Net revenue at the family-owned group, which will soon include Versace after a US$1.4 billion takeover, totalled 2.74 billion euros (S$4.1 billion), broadly in line with a Visible Alpha analysts’ consensus, with growth supported by all regions.

However, retail sales at the Prada brand fell 3.6 per cent in the second quarter alone, while they rose 40 per cent at the Miu Miu label which last year accounted for a quarter of the group’s total revenues.

The second quarter was impacted by lower tourist flows into Europe and Japan and an unfavourable comparison with last year, Prada’s managers said in a post-results conference call.

Chief executive Andrea Guerra told analysts that he expected tourist traffic to recover to last year’s levels at the end of August.

Last month the Italian company parted ways with Prada’s brand CEO Gianfranco D’Attis. Guerra has taken on the additional responsibilities for now and plans to keep them for the time being.

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“If it is an interim (arrangement), it’s a long one,” he said.

Tough times for luxury

The group’s adjusted operating profit rose 8 per cent to 619 million euros in the six months, below the 636 million euro operating Ebit seen in an analyst consensus provided by Visible Alpha.

“This healthy performance was achieved against a challenging backdrop, somewhat unprecedented in our industry,” said Prada chairman Patrizio Bertelli in a statement.

The group expects the completion of the Versace acquisition from Capri Holdings between September and November this year.

A recovery for the luxury industry remains elusive. Gucci owner Kering posted a 15 per cent drop in quarterly revenues, LVMH saw a 4 per cent decline in quarterly sales and even Hermes, despite a 9 per cent sales increase, showed signs it is not totally immune to a wider luxury downturn. REUTERS