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Heavily in debt, Prada says online sales up over 200% in 2020

Heavily in debt, Prada says online sales up over 200% in 2020

The house of Prada was heavily indebted during the health crisis and posted 1.20 billion euros of debt in December 2020. Yet the Italian label remains optimistic and is counting on its sales on e-commerce platforms, which reportedly doubled by more than 200% last year.

 

The Italian luxury house Prada has taken on a heavy debt load in this health crisis and is lamenting 1.20 billion euros in debt as of December 2020, while this figure was 829.0 million euros a year ago. However, its cash reserve, estimated at €538.3 million, allows it to revise its net debt to around €662.8 million.

 

On Wednesday, March 10, Prada unveiled in a statement a report on its fiscal year 2020 balance sheet that reveals that the Italian house’s online sales were boosted by 200% during the year 2020. The group recorded €2.42 billion ($2.9 billion) in revenue over the period, a 24 percent annual decline.

 

In the second quarter, the owner of Prada, but also of Miu Miu, Church’s, Car Shoe and Pasticceria Marchesi pastry shop, this fall was limited to 8%, which the group explains by “the gradual improvement in all geographical areas“, “to the point of a full recovery of retail sales in October and December compared to the same months in 2019.”

 

In the same release, Prada announced that its retail sales, which make up about 90% of the brand’s revenue, recovered in the second half of the year. Sales in China, for example, would have given Prada a glimpse of recovery, with sales in Taiwan and mainland China up 61% and 52%, respectively, for the second quarter of 2020.

 

The Middle East, up 26%, was next, followed by Korea, up 22%, and finally, the Americas with a 4% jump. Wholesale operations fell 49% compared to fiscal 2019 and decreased 20% for the second half of the year, compared to the same period in 2019. According to the group, this recovery is due to “growth in local consumption in the second half of the year in all geographical areas“, as well as the group’s “immediate, decisive and far-reaching” response from the start of the health crisis.

 

Prada also believes that the health context has accelerated “the digital evolution, reinforcing the omnichannel strategy of the Prada group,” tripling its sales via the e-commerce channel compared to 2019. The group notes that its Prada brand has seen “triple-digit growth in views on Instagram” for the spring-summer 2021 season, compared to its spring-summer 2020 collection. Its Weibo hashtag #PradaSS21 generated 170 million views in a single day in 2020 and the label boasted 32 million and 35 million, respectively, on Chinese social media apps Weibo and Douyin.

 

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In addition, the Italian house said its Leather Goods category saw double-digit growth for the second half of the year in Asia, the U.S., and the Middle East, “thanks to successful new product launches and reinterpretations of iconic products,” according to a note from Bernstein. Prada also revealed that the house is “radically transitioning to a younger generation,” which has stronger key performance indicators in terms of retention, average order value. Prada believes this is due to “landmark initiatives,” such as its Linea Rossa line, “fit perfectly into the new world focused on sportswear and young consumers.”

 

During a conference call, the house announced that it “does not plan to sell” the Prada brand, but that it “may perhaps consider acquisitions of other brands.”

 

Read also > ECONOMY: U.S. STIMULUS PACKAGE AND VACCINATION SHOULD HELP ACCELERATE GROWTH IN 2021

 

Featured Photo : © Press

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