MILAN — A solid performance that accelerated in the second half of 2021 boosted Prada Group revenues in the 12 months ended Dec. 31.
Sales climbed 41 percent to 3.36 billion euros compared with 2.42 billion euros in 2020. Revenues rose 8 percent compared with 2019. Both figures were provided at constant exchange rates, boosted by the “excellent” performance of the retail channel, the company said on Tuesday in a trading update.
Chief executive officer Patrizio Bertelli said “2021 was a year full of challenges but we proved to be ready and quickly responded to the needs of an extremely dynamic market, putting in place actions that allowed us to understand changes in consumer behavior effectively. The Prada Group has the capabilities and resources to set itself apart and deliver on its future growth objectives.”
In the second half of last year, sales at Prada‘s directly operated stores, including e-commerce, grew 27 percent compared with 2020 and were up 21 percent compared with 2019, both at constant exchange rates.
The group has been actively raising its luxury positioning, slashing wholesale accounts, endorsing full-price sales by canceling markdowns and investing in online sales, marketing and communication.
Prada underscored “a significant increase” in operating profit, supported by the higher contribution from the retail channel, as well as by full-price sales.
As of Dec. 31, the strong cash flow generation allowed the group to achieve a net financial surplus.
In November, Bertelli hosted the group’s Capital Markets Day at Milan’s Fondazione Prada, providing an update on its growth strategies.
Financial targets in the medium range include reaching revenues of around 4.5 billion euros, which implies almost doubling 2020 figures. The company is also targeting an operating profit of around 20 percent of sales.
Key objectives are to double the percentage of the group’s online sales to represent 15 percent of retail revenues and to increase the productivity of directly operated stores by 30 to 40 percent.
Luca Solca, senior analyst global luxury goods at Bernstein, said Prada’s performance is 3 percent ahead of consensus and that “outperformance in retail is encouraging for margins,” rating shares Outperform.
Anne Ling, equity analyst at Jefferies, said Prada’s 2021 revenues were between 2 and 3 percent higher than market estimates. As retail sales in the last quarter last year continued to accelerate, “based on our rough estimates, [they] rose to 24 percent year-on-year growth” in the fourth quarter compared to 18 percent in the previous quarter of 2021. “We expect operating leverage to be significant.”