What to Watch: Prada Group’s New Management Structure
The Prada Group kicks off 2023 with a newly revised organization, which puts to rest speculation about the management handover at the Italian luxury company, easing the minds of analysts, who had long voiced the need to have some visibility about the future governance of the company.
In December, Lorenzo Bertelli was confirmed as future leader of the group while Andrea Guerra is expected to join the company as chief executive officer at the annual shareholders meeting for the approval of the 2022 financial statements, scheduled for Jan. 26.
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At that meeting, Patrizio Bertelli, who shares the CEO role with his wife Miuccia Prada, will be recommended as chairman of the group. Current chairman Paolo Zannoni will be suggested as executive deputy chairman of the board of directors of Prada SpA and, at the same time, chairman of Prada Holding SpA.
In another development for the group, on Monday Gianfranco D’Attis took on the role of CEO of the Prada brand. D’Attis reports to the group CEO, so first to Patrizio Bertelli and then to Guerra. The appointment signals a further change since Benedetta Petruzzo has been helming the Miu Miu brand as CEO, while Bertelli and Miuccia Prada were co-CEOs of the group and of the signature brand.
D’Attis was previously president of Christian Dior Couture Americas. Earlier, he was international managing director of Jaeger-LeCoultre.
Guerra and D’Attis join the group as it continues to “invest with a long-term perspective, in creativity, industrial know-how and product innovation,” and an intensified focus on leather goods, as Patrizio Bertelli said in commenting first half sales and earnings at the end of July.
The strategy is to boost leather goods sales to 60 percent of overall revenue, which in the first half generated 51 percent of revenue, with higher prices and higher quantities sold.
Overall revenue for the period was up 22 percent to 1.9 billion euros.
The group is also working on upgrading and refurbishing its store estate worldwide, optimizing sales per square foot.
Sources in Milan see these changes as potentially leading to a second listing in Europe for the group, whose shares have been trading in Hong Kong since 2011. In November 2021, during the group’s Capital Markets Day, Patrizio Bertelli admitted: “We could explore a listing in Europe. That said, we don’t feel the need to now, we are OK this way.” He acknowledged “certain investors” do not consider channeling their investments in Hong Kong, but, “after all, we [the family] have 81 percent of the capital.”
One luxury goods analyst believes London could be favored by Bertelli, rather than Milan, given the several attempted and failed IPOs in the early 2000s in the Italian city, which, the source contended, left “a bitter taste in his mouth.”
A dual listing can help diversify the risks for investors in the wake of the Russian invasion of Ukraine, which has increased the volatility of global stock markets, and given the uncertainties related to the economic and political conditions in China.
As part of the succession plan, Miuccia Prada last month was confirmed as creative director of Miu Miu and Prada, the latter together with Belgian designer Raf Simons, and a board member. She is relinquishing her role as co-CEO.
In November, Simons, who has been co-creative director with Miuccia Prada of the company’s signature line since February 2020, said he was shuttering his namesake fashion brand after 27 years. This led to growing speculation about a potential increased commitment at Prada, which has been seeing a surge in sales for a few seasons now. However, for the time being, the Italian designer is staying put. Actually, industry sources say she is increasingly involved in the design of Miu Miu, named after her nickname, and which has grown into something of a manifesto for diversity and inclusion and women’s empowerment.
In a joint statement, Prada and her husband underscored that these management decisions were “a fundamental step” in the history of the company, while they remained “completely engaged” in contributing to its evolution.
They remarked on Guerra’s experience “in businesses where the founders are present and engaged.” To be sure, Guerra, a former LVMH Moët Hennessy Louis Vuitton senior adviser and former Luxottica CEO, has worked with LVMH chairman and CEO Bernard Arnault; Eataly founder Oscar Farinetti, and the late Leonardo Del Vecchio, founder of Luxottica. This track record was not lost on analysts, who generally gave a thumbs-up to his arrival at Prada, which is seen as helpful to ease Lorenzo Bertelli into his future role helming the group.
A possible retirement of Patrizio Bertelli, who is 76, has been in the news for a while, further fueled by the executive during Prada’s Capital Markets Day when he pointed to a potential generational shift in three years.
Patrizio Bertelli’s choice is not a surprise as his son Lorenzo has increased his responsibilities and been a driver of change since joining the company in 2017. He was named group marketing director in 2019 and, additionally, head of corporate social responsibility in 2020. In May 2021, he joined as a director of the board.
The relationship between Patrizio Bertelli and Guerra is a long-standing one, as Luxottica started producing the Prada and Miu Miu eyewear collections in 2003. Also, veteran Luxottica executive Massimo Vian joined Prada as chief of industrial production two years ago.
Guerra was named in early 2020 as CEO of the newly created LVMH Hospitality Excellence division, but last May he became a strategic and development senior adviser to the French group.
He left eyewear group Luxottica in September 2014 after 10 years working with Del Vecchio and becoming instrumental in the growth of the company.
After Luxottica, Guerra became a strategic adviser to former Italian Prime Minister Matteo Renzi and then joined Italian high-end food emporium Eataly as executive chairman in 2015.