MILAN — Prada Holding saw drastic improvement in its second-quarter sales and earnings results, but the improvement couldn’t prevent top- and bottom-line declines in the first half.
This story first appeared in the September 9, 2002 issue of WWD. Subscribe Today.
In the second quarter, earnings before interest, taxes, depreciation and amortization grew 65 percent to $37.2 million and earnings before interest and taxes rebounded to $8.1 million from a loss of $1.4 million in the comparable 2001 period. Sales rose 11.5 percent to $349.7 million from $313.6 million in the 2001 quarter.
Prada said this growth was fueled by healthy sales of the Prada label, sales of which grew 11.7 percent to $275.6 million. The Prada brand registered increases of 18.1 percent and 19.6 percent, respectively, in the U.S. and Europe during the quarter. Dollar figures are converted from the euro at current exchange rates.
The second-quarter rebound reversed first-quarter weakness, some of it due to the acceleration of bookings into the final quarter of 2001, but didn’t offset it completely. First-half EBITDA dropped 21.9 percent to $93.5 million from $119.7 million in the prior-year period and EBIT declined 49.1 percent to $37.5 million. Sales in the half were down 4.7 percent to $756 million from $793.6 million in the first six months of 2001.
In a statement issued by the company on Friday, Prada attributed the sales drop in the first quarter to the early booking in December 2001 of the spring-summer 2002 orders, a new procedure for the company.
“Although we are not favored by the general world context, the group is determined to develop all markets and to rationalize its business,” said Prada’s chief executive officer Patrizio Bertelli in the statement. Bertelli also reiterated the group’s focus on “strengthening and developing its direct retailing strategy for all group labels.”
As reported, the company opened a Jil Sander store in New York on Friday, and plans openings in Beverly Hills, Tokyo, St. Moritz and Milan for other group brands. In addition to Prada, Miu Miu and Jil Sander, the group owns Helmut Lang, Genny, Carshoe, Azzedine Alaïa and Church’s.
Data for 2001 does not include the Fendi group. At the end of November last year, Bertelli sold his 25.5 percent stake in the Roman fashion house to LVMH Moët Hennessy Louis Vuitton for about $260 million.
This sale, together with the divestiture of Byblos and a $624.1 million bond issued in December, helped restructure the group’s debt, which is assessed at $801.5 million as of June 30, compared with $995 million last Dec. 31. After numerous postponements, Prada in July put on hold its initial public offering at least until 2003.
Prada also said it was focused on cutting costs, which dropped 16.3 percent to $102.2 million in the first half of the year.