On Monday morning, Milan-based Prada Group (brand owner of Prada and Miu Miu) announced preliminary sales earnings for its fiscal year ending on January 31, 2017 — along with many justifications. Yes, revenues are down 10 percent, according to current exchange rates (falling from $3.8 billion to $3.4 billion), but they’re in line with expectations. It’s not all bad: Prada saw a second-half upswing and expects the trend to play on. Here are some big takeaways from Prada’s report.
Thanks to new partnerships with multi-brand online retailers including Yoox Net-a-Porter and Mythersa.com, Prada saw a 13 percent increase in wholesale revenue. Prada plans to build on that success by expanding its online offerings and syncing its online and in-store experiences. As a result, in each of the next three years, it hopes to double online sales.
“We are strengthening [our] retail management structure with the aim of integrating online channels with traditional channels in a truly innovative dimension,” said Patrizio Bertelli, chief executive officer of Prada Group, during the earnings statement.
In the last half of the year, both the Prada and Miu Miu labels proved to be more coveted than in the six months prior; Prada Group reported a boost in ready-to-wear sales, as well as an “excellent market response” to the brands’ footwear and leather goods collections.
“It was clear that they were playing to millennials: They were doing things that were new and different,” said Ashley Paintsil, editor of FashInvest, regarding the success of Prada’s accessories in recent months. “For instance, there were those Miu Miu flats that everyone went crazy for at Net-a-Porter, Matches Fashion — they were selling out. Every millennial wanted to buy them.”
China’s not growing as quickly as it once did. Prada reported Asia-Pacific sales as a whole were down by 12 percent for the year. But hope springs anew, with the company predicting a “very dynamic” second half in the region and “rapid growth” in China in the third quarter.
Retail sales in the company’s 620 directly operated stores, which account for 80 percent of its total sales, slipped by 14 percent year-over-year. Prada’s answer will be to cut back on its retail network of luxury department stores, independent retailers and franchise stores, which it built up in 2011 following a period of weakened luxury spending.
New ad strategy
Prada is banking on what it calls “Prada365” to goose sales. The program bucks the traditional, print-heavy seasonal fashion campaign, with minimal imagery representing a single idea, in favor of multiple narratives that live across print, online and social media.
“Prada is realizing it needs to rejuvenate its campaign,” said Paintsil. “Somebody commented on a recent campaign that the brand is old-fashioned, yet modern. It’s trying to reconcile those two things. With Prada365, it’s providing a consistent stream of images. Miuccia [Prada] is realizing that we live in a world of newness, and you need to feed that social media beast to stay relevant. We’re going to see something positive for them in the next quarter.”