MILAN — Prada SpA is further cutting back its wholesale network.
The Italian luxury group said on Tuesday that, given “the growing complexity and fragmentation of the wholesale market,” it plans to rationalize its network of independent partners.
The decision aims to “ensure greater consistency in pricing policies across retail and digital channels.” It is also seen as a means to further grow the group’s brands in the long-term.
A company spokeswoman said that this will help Prada be “more transparent” with its customers in terms of pricing, having greater control over its distribution and further raising the image of its brands. It is understood this move will mainly impact the group’s core leather goods category, which last year accounted for 57 percent of sales.
In March, reporting the group’s 2018 financial figures, chief executive officer Patrizio Bertelli emphasized the decision to end markdowns starting in 2019, after gradually reducing them in 2018.
“This has already impacted results and I believe it will utterly strengthen the brand image and guarantee higher margins, yielding results in the medium-term,” he said in a conference call with analysts.
In 2018, the retail channel was up 4 percent to 2.53 billion euros, or 7 percent at constant exchange, accounting for 82 percent of total revenues, and it was driven by full-price sales. On the other hand, the wholesale channel was flat with revenues of 566 million euros.
For the full-year, the company reported a 17.6 percent decline in net profits, which fell to 205 million euros, on the back of revenues that were up 3 percent to 3.14 billion euros.