Prada in Beauty Joint Venture

MILAN--Prada Group on Friday balanced weaker first-quarter financial results with the announcements of new board members and a joint venture to launch fragrances and beauty products.Net profits were not released, but earnings before interest, taxes, depreciation and amortization dropped 51 percent to $53.4 million from 108.6 million in the year-ago quarter. Earnings before interest and taxes declined a steeper 61 percent to $27.8 million from $71.4 million. Dollar figures have been converted from the euro at current exchange rates.Net consolidated sales fell 15.4 percent to $385.4 million compared with $455.3 million in the same period last year. In a statement, the company attributed this drop to different accounting and billing procedures. In fact, Prada pushed up, to December, deliveries of the spring-summer 2002 collection to "guarantee improved service and an increased penetration of the market," said the statement. As a consequence, first-quarter 2002 sales do not include these accelerated shipments.A cost-cutting strategy caused operating costs to drop 5.7 percent to $194.1 million from $205.9 million in the first quarter 2001.Prada's financial figures for the first quarter do not include results for Fendi. As reported, Prada chief executive officer Patrizio Bertelli sold his 25.5 percent Fendi stake to LVMH Moet Hennessy Louis Vuitton last November.The statement also said Prada and Miu Miu accounted for the bulk of revenues, representing 78.7 percent of sales or $301.2 million.The group's other labels--Jil Sander, Church's, Helmut Lang, Genny, Car Shoe and Azzedine Alaia--registered a 10.6 percent increase in the first quarter, totaling $81.8 million from $74 million in the same period last year.Meanwhile, to build a more independent executive management with outsiders in light of the company's initial public offering scheduled for next month, Prada announced the appointment of Franco Tato to the board of directors. Tato was chief executive officer of Enel, Italy's main energy group. Francesco Gianni, of Studio Gianni, Origoni, Grippo & Partners, also was appointed to the board.While Luciano Benetton was also contacted to join the board, a Benetton spokesman said the chairman of the apparel company "had not decided yet." Bertelli remains chairman of the board and ceo of Prada. Other members of the board include vice chairwoman Miuccia Prada, Jacob Meint Buit, Jens Peter Howaldt, Roberto Massardi, Marco Salomoni, and chief financial officer Riccardo Stilli. A Prada spokeswoman said "other appointments will be made soon."In a separate development, Prada announced it had signed a letter of intent with Gruppo PUIG Beauty & Fashion SL to form a joint venture that will create and distribute perfumes and skin care under the Prada label. PUIG also owns brands Nina Ricci, Carolina Herrera, Paco Rabanne and Payot, and it produces and distributes Hussein Chalayan perfumes under license. A Prada spokeswoman said the agreement with PUIG will allow Prada to further expand its skin care division, which was launched in 2000."