Prada Group increases annual profit by 44 percent

The Italian fashion group Prada SpA can look back on another successful financial year thanks to the unbroken popularity of its Prada and Miu Miu brands. On Thursday, the company announced that it was also able to achieve significant growth in sales and earnings during 2023.

Accordingly, the Prada Group's consolidated turnover last year totalled just under 4.73 billion euros. This corresponds to an increase of 13 percent compared to 2022. Adjusted for exchange rate changes, the growth rate was 17 percent.

In the group's own retail business, revenue increased by 12 percent (currency-adjusted +17 percent) to 4.19 billion euros, not least thanks to good business from the Miu Miu label (+58 percent); in the wholesale business, revenue grew by 12 percent (currency-adjusted +13 percent) to 433 million euros. Licence income rose by 36 percent to 104 million euros.

Strong growth in all other regions more than compensates for weaker demand in America

Retail sales developed particularly dynamically in Japan, where they rose by 31 percent (currency-adjusted +44 percent) to 484 million euros. In the other markets of the Asia-Pacific region, they increased by 17 percent (currency-adjusted +24 percent) to 1.45 billion euros, in Europe by 10 percent (currency-adjusted +14 percent) to 1.31 billion euros and in the Middle East by 8 percent (currency-adjusted +10 percent) to 180 million euros.

The fashion house only weakened in America, where retail sales fell by 2 percent to 767 million euros. Adjusted for currency effects, however, they were roughly at the same level as in 2022.

In addition to the strong sales growth, an increase in the gross margin contributed to a 37 percent improvement in earnings before interest and taxes (EBIT) to 1.06 billion euros. Adjusted for special effects, it exceeded the previous year's level by 26 percent. Net profit attributable to shareholders rose by 44 percent, reaching 671 million euros.

Prada defies global luxury slowdown

With such strong results, an analyst for RSM UK, Robyn Duffy, said that the group had defied the current slowdown in sales for the luxury goods market, citing the demand for craftsmanship and quality as the reason behind the drive in Asia and Japan. Duffy further noted that Miu Miu had benefited from its "viral products, celebrity-packed runways and hyped collaborations", allowing it to speak to the minds of younger consumers.

Duffy continued: "The new direction for the business since CEO Andrea Guerra joined has delivered a sharper focus on near-term priorities including product innovation, events and a stronger digital footprint. Smart longer-term plays such as the purchase of Prada’s New York Fifth Avenue store have also cemented the brand’s presence in one of the most desirable real estate locations in the world.

"2024 brings some uncertainty to the luxury goods sector, with travel trends in the US and Europe normalising, cost-of-living pressures dragging on consumer sentiment, and China’s full spending potential yet to be unleashed. But Prada has positioned itself well to withstand current pressures and enters the coming financial year in good health."