PRADA TO HONE ITS DISTRIBUTION

Byline: Sara Gay Forden

MILAN--With demand for Prada's products growing faster than its factories can produce them, the company plans to control its distribution more closely and will have to slow down sales growth.
That was the word Tuesday from Patrizio Bertelli, Miuccia Prada's husband and the business brain behind Prada's fast-paced expansion strategy. Bertelli outlined the company's business plans at a press conference here.
The firm, he said, will eliminate those distributors that appear to be higher risk or "less loyal" in a move toward channeling more than 70 percent of group sales through directly owned shops by 1998.
In achieving this, the firm, for example, plans to cut independent retail and department store doors carrying the Prada brand from the current 502 to 465 in 1998.
"We're only going to sell to the people we like," joked Bertelli.
Nevertheless, Bertelli put forth, as in the past, some hefty sales forecasts. In 1996, Prada registered $300 million in total wholesale sales and is projecting a 60 percent increase this year to $480 million, while the outlook for 1998 is $620 million.
On the retail front, some 42 directly owned Prada shops are slated to open this year, as well as nine Miu Miu boutiques and two Granello shoe and bag shops, making a total of 136 directly owned boutiques. That number is expected to grow to 160 next year.
Prada's newest project is the launch of a skiwear line for men and women for the fall/winter '97 season. A few samples were shown during the men's wear presentation Tuesday. The line will be incorporated directly into the Prada collection and will be priced accordingly, Bertelli said.
"This is a natural evolution of our ready-to-wear business," he said, "but it won't be called Prada Sport."
In other areas of the Prada business, Bertelli declined to reveal the much-anticipated name of the partner for a new Prada fragrance and cosmetics line, expected to bow for September 1998, saying that the company is listed on the New York stock market and he had to respect stock market regulations.
According to market reports, however, negotiations with EstAe Lauder have been proceeding for some time, though both sides have declined to confirm the talks.
"Grass grows faster," said one industry source about the pace of the negotiations. Market rumors are that talks are logjammed over what to do with old stock from Prada's first fragrance, which was taken off the market after two years in the early Nineties. The initial license was with Orlane, but Bertelli said the contract was broken on nonperformance issues.
"We were a younger company then; we didn't know as much as we know now," Bertelli said.
He added that a new Prada innerwear line will debut in June, as planned. According to the company's no-license strategy, the new collection is being produced in-house. It also won't bear a Prada logo, as some designer innerwear lines do.
"It won't have any names, initials or little metal triangles," Bertelli said. "It is for people who don't want names on their underwear."
Bertelli added that a home line is also still in the works for 1998.
Overall, Bertelli said, Prada expects to invest about $102 million (157 billion lire) in additional production and distribution facilities and advertising this year.

To Read the Full Article
SUBSCRIBE NOW

Tap into our Global Network

Of Industry Leaders and Designers

load comments
blog comments powered by Disqus