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Patrizio Bertelli’s Strategies Leading to Prada’s Strong Growth – WWD

MILAN — Patrizio Bertelli might simply tout Prada’s first-half figures with a powerful, “I informed you so.”

Reporting a return to revenue and a 60 p.c leap in revenues within the first half of the 12 months, the strategic strikes that Prada’s chief govt officer started to implement years in the past are proving to be fueling the expansion of the posh group — regardless of the impression of the COVID-19 pandemic. These embrace elevating Prada’s luxurious positioning, slashing wholesale accounts, endorsing full-price gross sales by canceling markdowns and investing in on-line gross sales, advertising and communication.

Because the group additionally reported an “encouraging” month of July, Bertelli stated throughout a convention name with analysts on Thursday that he was “assured within the second half,” barring “traumatic” occasions, and that he was planning to proceed to put money into the direct management of Prada’s provide chain, “which provides us a aggressive edge” — main observers to imagine further acquisitions of specialised producers might be within the playing cards.

As reported, in June the Prada and Ermenegildo Zegna groups joined forces to accumulate a majority stake in Filati Biagioli Modesto SpA, which specializes within the manufacturing of cashmere and different treasured yarns. Prada has, through the years, structured its personal provide chain and in the present day has 20 manufacturing websites in Italy and three in Europe.

Prada returned to the black within the first half of the 12 months, lifted by a robust efficiency in its retail enterprise, triple-digit share development in its on-line channel, and strong positive factors within the Asia Pacific and U.S. markets.

Within the six months ended June 30, the group reported a internet revenue of 97 million euros, which compares with a lack of 180 million euros in the identical interval final 12 months.

Revenues amounted to 1.5 billion euros, up 60 p.c in contrast with 938 million euros within the first half of 2020.

Working revenue amounted to 166 million euros, in contrast with an working lack of 83 million euros in the identical interval final 12 months. Within the first half of 2019, working revenue totaled 150 million euros.

Additionally signaling Bertelli’s dedication, the manager as soon as once more expressed his confidence within the development of the Miu Miu and Church’s manufacturers, as he has on a number of events earlier than, defending their worth when analysts typically evaluate them with the Prada label, which continues to account for the lion’s share of revenues, representing 86 p.c of the entire.

“Within the first half, we reached break-even with Miu Miu, which goes by means of a turnaround, adapting merchandise to completely different necessities, and it has an enormous potential to precise,” Bertelli stated. “I strongly imagine within the second half it’ll improve its margins and that we are going to see sturdy ends in two years. Miu Miu is extraordinarily profitable in China and [South] Korea and we are going to lengthen this constructive [business] to different markets.”

Bertelli additionally underscored the success of the Upcycled by Miu Miu project in collaboration with Levi’s, which was launched in Could and provides new life to pre-loved denim.

Gross sales of the Prada model climbed 64 p.c to 1.1 billion euros in contrast with the primary half of 2020. In contrast with 2019, its revenues rose 13 p.c. Miu Miu represented 13 p.c of complete revenues and grew 43 p.c to 166 million euros. In contrast with 2019, gross sales had been down 8 p.c versus 2019.

Gross sales of the Church’s model amounted to 11 million euros, down 1 p.c in contrast with final 12 months, however falling 52 p.c in contrast with the primary half of 2019.

Bertelli defended the “know-how and industrial functionality” of Church’s Northampton plant and stated the model suffered within the first half because of a dependence on the European market — 90 p.c of its enterprise — and the shop closures within the U.Ok. “After the pandemic, it’ll return to pre-COVID-19 ranges,” he predicted.

In any case, he informed analysts that “the smaller manufacturers aren’t a elementary issue to look at,” and emphasised how their experience is “translated and included into the larger manufacturers.”

By class, the group reported “excellent” development in ready-to-wear, which noticed a 71 p.c improve in revenues to 334 million euros, accounting for 26 p.c of complete gross sales. Attire was up 24 p.c in contrast with the identical interval in 2019.

“Prepared-to-wear is prime for the event of the model,” stated Bertelli, whereas nonetheless supporting the expansion of leather-based items.

Leather-based items remained the group’s core enterprise, representing 55 p.c of gross sales, and this class was up 51 p.c to 703 million euros. In contrast with 2019, gross sales had been up 4 p.c.

Revenues of footwear, which account for 17 p.c of gross sales, grew 77 p.c to 224 million euros. In contrast with 2019, they had been up 5 p.c.

Bertelli touted the “extension of excessive worth merchandise in all classes, enhancing model fairness and id.” He additionally underscored the significance of avoiding differentiating the product relying on the geography.

Gross sales in Asia Pacific amounted to 599 million euros, up 65 p.c in contrast with the identical interval final 12 months, and a 35 p.c achieve versus 2019. The area accounted for 47 p.c of the entire. In contrast with 2019, gross sales in China climbed 77 p.c; in South Korea, they soared 108 p.c, and in Taiwan, they had been up 74 p.c.

Gross sales within the Americas rose 163 p.c to 232 million euros, and gained 53 p.c in contrast with 2019. The area within the first half of 2021 represented 18 p.c of complete revenues, and buying was pushed by locals.

Europe was up 19 p.c to 263 million euros however was nonetheless down 29 p.c in contrast with 2019, though gross sales improved with native prospects.

Russia confirmed sturdy development, Bertelli stated.

Japan was up 25 p.c to 129 million euros, however in contrast with 2019 gross sales had been down 24 p.c as a result of pre-Olympics lockdowns. The nation is now displaying “good indicators of restoration,” the manager stated.

The Center East grew 129 p.c to 59 million euros and was up 28 p.c in contrast with 2019.

The corporate didn’t broaden its retail community within the interval however is investing in 76 renovation tasks and has secured a brand new location in Athens.

In the course of the first half of 2021, a mean of round 17 p.c of shops had been closed, however retail gross sales nonetheless climbed 60 p.c to 1.28 billion euros in contrast with the primary half of 2020, accounting for 90 p.c of the entire. At fixed trade charges and in contrast with the primary half of 2019, they had been up 8 p.c, displaying sturdy acceleration within the second quarter. The latter confirmed double-digit development in contrast with the second quarter of 2019. Bertelli stated the group had invested in client engagement in shops and in particular pop-ups inside its personal community. He additionally pointed to extra jewellery offered within the boutiques.

“It’s quite simple, to enhance gross sales you have to enhance product and positioning,” he supplied.

Wholesale revenues decreased 37 p.c to 196 million euros in contrast with the primary half of 2019, in keeping with the group’s selective method to the channel. In contrast with the primary half of 2020, wholesale was up 119 p.c.

E-commerce has grown at a triple-digit price for 5 consecutive quarters, stated chief monetary officer Alessandra Cozzani. The net channel now accounts for 7 p.c of retail gross sales.

Lorenzo Bertelli, advertising director and head of CSR, trumpeted the profitable launch of Prada and Miu Miu flagships on Tmall and the elevated visibility of the manufacturers on digital platforms.

Prada’s males’s spring 2022 video garnered 2.9 million views and was ranked first on IGTV Males’s Vogue Weeks, up 53 p.c in contrast with fall 2021. It additionally ranked first in vogue weeks’ attain and engagement price.

Miu Miu’s fall 2021 vogue present video on YouTube scored 2.1 million views, up 950 p.c in contrast with spring 2021.

He additionally stated the Prada Cup generated essentially the most viewers engagement of all of the match phases, defining the Luna Rossa crusing boat as “a longstanding aspect of the activewear id of the Prada model.”

The corporate has additionally doubled down on its inclusive technique, partaking expertise from numerous backgrounds and completely different sectors, from music to sports activities. The group will announce its Sustainability Roadmap within the fall, additional embedding ESG in its technique, he concluded.

Cozzani stated gross margin of 74.3 p.c was at “the best degree because the IPO” in 2011 as a result of profitable channel combine and product elevation, in addition to full-price gross sales.

Capital expenditures amounted to 75 million euros, in contrast with 49 million euros final 12 months.

The online monetary place stood at a detrimental 102 million euros, enhancing from a detrimental 311 million euros on the finish of December final 12 months.

Bertelli revealed a Capital Markets Day within the fall.

https://wwd.com/business-news/monetary/patrizio-bertelli-strategies-leading-strong-growth-prada-1234890571/ | Patrizio Bertelli’s Methods Resulting in Prada’s Robust Development – WWD

Huynh Nguyen

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