On Tuesday 5 January the Italian company Prada declared that it would end the year 2020 with a positive operating result. Despite the blow dealt by the health crisis, the company saw a marked improvement in revenues and profitability in the second half of the year.
Prada is thus the first luxury brand to unveil its sales data for the holiday season, but also more generally positive earnings before interest and taxes for 2020. For its part, the Kering report is expected in February and that of LVMH at the end of January.
Because of the uncertain future and concerns about the pandemic, Prada Group said it had decided to take stock of its activities before publishing its annual results in March. The group had seen a 40% drop in turnover for the first half of the year, with an operating loss of 241 million dollars (196 million euros).
“Despite the impact of ongoing shop closures, which averaged 9% of the network, there was a gradual recovery in sales, culminating for retail sales in a full recovery to 2019 levels by December”. the group said.
Indeed and fortunately, from July to December, retail sales, representing 90% of Prada’s total sales, fell by only 6% at constant exchange rates. This drop is not considered then as a “dangerous” result, but rather a reassuring and positive one, given the situation which mainly suffers from the lack of tourist flows in Europe and Japan. The owner of Prada also said that retail sales had returned to last year’s level in December.
“This seems to be a good result, and probably better than what most other groups will report, based on a strong consumer-driven recovery of the Milanese brand” said analyst Luca Solca de Bernstein on the Prada update.
Prada claims to have still been profitable in 2020 despite shop closures linked to the pandemic with positive performances in America, the Middle East and Russia, but above all thanks to demand from the Chinese market where the brand grew by 52%. Sales in China increased by 60% in the second quarter of 2020, a sign of the economic recovery.
Young continental Chinese consumers are thus driving Prada’s V-shaped recovery, and their country’s growth is expected to continue until 2021. The brand is also counting on Russian and Middle Eastern consumers even if they cannot leave their country.
The group’s Chief Executive Officer, Patrizio Bertelli, said in a statement: “I am very satisfied with the way we have coped with the serious difficulties of the year just ended and with the way in which, despite the continuing uncertainty that is likely to persist over the coming months, we have managed to achieve positive results. Thanks to the generous commitment of all the group’s staff, we have been able to respond quickly and consistently to changes in the market, which has been appreciated by all our customers”.
Featured Photo : © Prada
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