LONDON — In the wake of strong revenue and profit gains in the first six months, Prada Group is sailing into the second half of the year with optimism — about China, its fast-growing leather goods business and its long-term strategies for growth.
As reported earlier this week, Prada will restage its men’s and women’s fall 2022 collections in Beijing on Aug. 5. The show will take place at Prince Jun’s Mansion, a courtyard hotel in downtown Beijing, formerly the residence of Prince Jun in the Qing dynasty.
The Beijing outing marks the Italian luxury brand’s return to the Chinese capital after 11 years, and it seems nothing will stand in the way of its plan – not even the latest lockdown in Wuhan, which was announced just as Prada released its first half results.
“We are seeing a recovery in China,” said Patrizio Bertelli, the group’s CEO, during a call to discuss the results for the first half ended June 30.
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Bertelli acknowledged the news of the Wuhan lockdown, but said he remains cautiously optimistic about the market’s recovery in the second half.
Bertelli touted Prada’s “global presence and geographical distribution of sales,” and said the group’s 600-plus store network helped to mitigate the impact of lockdowns in mainland China and the ongoing sanctions on Russia.
Andrea Bonini, group CFO, echoed Bertelli.
Bonini said the second half started on a high note thanks to “strong” trading in July driven partly by “an improvement” in China.
“We continue to monitor China and are looking at how the COVID-19 situation is developing. It remains an uncertain environment,” Bonini said.
Prada principals stressed that the Chinese market has not returned to normal, and that health controls, and consumer demand, vary by city and by region.
But the Beijing show will go on.
Until last month, some 30% of the group’s retail network was shut due to lockdown in large swathes of the country, so Prada is not only eager to make up for lost time, but also to reconnect with Chinese consumers.
Prada’s China push comes in the wake of strong revenues and profits in the first half of fiscal 2022.
Retail sales, which account for 90% of group revenue, rose 26% to 1.7 billion euros, while overall revenue for the period was up 22% to 1.9 billion euros.
The gains came from double-digit increases at all the group’s brands, and all the main product categories and geographic regions.
The return of American tourists to Europe was a big driver of sales, as were higher average prices, and the volume of goods sold.
Bonini noted during the analyst call that Prada Group has “a very healthy balance” between average price growth and sales volumes.
Net income nearly doubled to 188 million euros, while the group’s net cash position was 179 million euros as of June 30.
Prada Group, which returned to profitability in fiscal 2021, remains bullish about the current year, despite the macroeconomic challenges brought on by Russia’s invasion of Ukraine, and ongoing COVID-19 crises in China.
Bertelli said Prada continues to “invest with a long-term perspective, in creativity, industrial know-how and product innovation.”
He said that Prada Group’s “position of strength gives us confidence to execute against our strategy of fully exploiting our brands’ potential.”
This story was reported by WWD and originally appeared on WWD.com. Read the full story on WWD.com.
