Prada Group Reports Strong Profitability, Sales Growth in 2022
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MILAN — Prada Group on Thursday reported a strong set of full-year results and said it achieved margin targets thanks to a solid performance of the Prada and Miu Miu brands, and across all product categories.
In the 12 months ended Dec. 31, net profit soared 58 percent to 465 million euros compared with 294 million euros in 2021.
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Revenues rose 25 percent to 4.2 billion euros compared with 3.36 billion euros in 2021, when the group returned to profitability.
“Prada Group delivered excellent results in 2022, underpinned by brand momentum, greater client engagement and rigorous strategy execution,” executive director Patrizio Bertelli said in a statement.
“The retail channel drove our performance, achieving strong and broad-based organic growth at both Prada and Miu Miu. We performed well across all product categories and geographies, more than offsetting weakness in China due to COVID-9. We continued to develop our sustainability capabilities and activities, ensuring they remained linked to the identities of our brands and relevant to our clients. The recent changes to our governance structure mark a fundamental evolution for the group. In 2022, we further strengthened our positioning and our organization, and in the current year we will accelerate the execution of our strategy. We intend to stay on a path of steady and sustainable growth as we work towards the full potential of our brands.”
Bertelli was referring to the arrival of Andrea Guerra in January as chief executive officer. He is viewed as someone who can facilitate the transition until Lorenzo Bertelli, Miuccia Prada and Patrizio Bertelli’s son, will become the leader of the group in a few years’ time.
His parents have given up their shared co-CEO title, while remaining executive directors of the board. Miuccia Prada stays on as creative director of Miu Miu and of the Prada brand, the latter with Raf Simons. Patrizio Bertelli is expected to be named chairman this spring.
Last year, adjusted operating profit, which excluded non-recurring income and expenses comprising 42 million euros of writedown of non-current assets in Russia, 19 million euros of writedown of the Church’s brand, and 8 million euros for settlement of a litigation, amounted to 845 million euros, up 69 percent versus 2021. This represented a 20.1 percent margin.
During the group’s capital markets day in November 2021, financial targets in the medium range included reaching revenues of around 4.5 billion euros, which implies almost doubling 2020 figures. The company said it was targeting an operating profit of around 20 percent of sales.
Sales of leather goods were up 18 percent; ready-to-wear 27 percent and footwear 29 percent.
Gross margin represented 78.8 percent of revenues, up 30 percent on 2021 and totalling 3.31 billion euros.
Both Prada and Miu Miu grew strongly, with positive contribution from both average-price and full-price volumes. Prada revenues rose 25 percent and Miu Miu sales were up 20 percent, recording a sharp acceleration in the second half.
The two brands helped retail sales climb 28 percent to 3.73 billion euros.
The company underscored that in the last quarter, the group was the only luxury company to feature its two main brands within the top five of the Lyst Index: Prada ranked first, and Miu Miu fourth. Lyst also nominated Miu Miu its “brand of the year.”
In 2022, wholesale revenues amounted to 388 million euros compared with 386 million euros in 2021.
Online sales recorded double-digit growth, following investments in the channel, including to improve the omnichannel experience. Penetration remains stable at 7 percent of retail sales.
Guerra said he has joined the company “at an exciting time of evolution,” finding “great energy.”
He touted the group’s growth potential as “large, thanks to its extraordinary creative vision and industrial strength. We will further invest in the desirability of our brands, in the renovation of our retail network and in manufacturing capabilities. Execution will remain critical in the coming years, and we shall continue to build retail excellence, developing more frequent and stronger connections with our clients. In 2023, we expect revenue growth to remain solid and above market average. China has restarted to be an engine of growth; however, in this ever-changing scenario, we will remain vigilant and maintain a disciplined approach to costs and capital allocation.”
By geographic markets, sales in the Asia Pacific region rose 3 percent to 1.23 billion euros, but were down 2 percent at constant exchange rates, impacted by multiple lockdowns in China. This was offset by the strong performance in South Korea and Southeast Asia. The region returned to moderate growth in the second half, with sales up 3 percent.
In Europe, revenues jumped 59 percent to 1.18 billion euros, thanks partly to an uptick in tourism throughout the year.
Revenues in the Americas rose 37 percent to 782 million euros, normalizing in the second half due to the strong comparatives and outbound tourist flows.
Japan grew 24 percent to 369 million euros, accelerating in the second half, and the Middle East advanced 38 percent to 167 million euros.
Capital expenditure totaled 276 million euros compared with 217 million euros in 2021.
The group reported a net cash position of 535 million euros compared with 238 million euros in 2021.
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