NEW YORK — Prada is thinking big about its future.
The Italian luxury goods firm is projecting its profits will grow by an average of 23.5 percent a year over the next five years, while its sales will increase by an average of 3.2 percent annually, reaching 1.51 billion euros, or $1.83 billion, by 2010, according to a document Prada issued to bankers over the summer and which it released to WWD last week.
The growth will come from increased focus on the core brands of Prada and Miu Miu, as well as labels such as Azzedine Alaïa and Car Shoe. Meanwhile, Prada has formed a new company called Prada SpA Group that excludes money-losing businesses Jil Sander, Helmut Lang and a minority interest in Church's. These operations now fall under the jurisdiction of other group holding companies.
Prada has isolated "nonstrategic brands [Jil Sander and Helmut Lang] from the core group with a view to their subsequent disposal," the document states, adding that Prada's shareholders are assessing "nonbinding offers for Jil Sander and Helmut Lang brands from various industrial partners and private equity funds."
However, company sources downplayed any imminent sale of Jil Sander. Prada wants to relaunch the brand under the new design leadership of Raf Simons, whose first collections will bow for fall 2006.
When asked for further comment on Prada's restructuring efforts, chief executive officer Patrizio Bertelli said the following regarding Jil Sander: "The restructuring plan is on course to make the company profitable on an operational basis as early as next year."
Bertelli was just as bullish about Prada's overall future prospects, particularly the spring collections shown in Milan last month.
"The Prada and Miu Miu collections were met with overwhelming praise both by the press and the trade. This praise is reflected in the strong orders we have received thus far this year," the executive said. "It is proof that our efforts on product design and development, production efficiency, effectiveness of the distribution and communications are going in the right direction."
In typical Italian fashion, a cascading chain of companies control the business. The Prada family and Bertelli hold their stakes through ITMD Investments BV, which in turn owns 100 percent of Prada Holding NV. Prada Holding controls, either directly or indirectly, all the brands and business units, meaning Jil Sander, Helmut Lang, Prada SpA Group and the minority stake in Church's.
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