Italian luxury group Prada has continued to defy the broader luxury sector slowdown after posting strong quarterly revenue growth in contrast to many of its rivals.
The Milan-based group said on Wednesday (Oct 30) like-for-like sales in the three months to Sep 30 were up 18 per cent compared to a year earlier, without giving a total figure. This was driven by its Miu Miu label, which recorded a 105 per cent jump in sales in the period.
Sales at its eponymous Prada brand also grew, albeit by a far more moderate 2 per cent but still in sharp contrast to those at rival label Gucci, whose owner Kering reported last week that like-for-like revenues had fallen 25 per cent in the third quarter.
The luxury sector is facing a global slowdown amid decreased demand and a slump in Chinese sales. Shares in LVMH, the world’s biggest luxury group and considered a bellwether for the sector, have fallen around 15 per cent since the beginning of the year. The French group blamed a drop in revenues in the third quarter to falling sales in Asia and lower growth than expected in Japan, which it attributed to “a stronger yen”. Sales were also flat in the US.
Meanwhile, rival Kering, whose shares are down more than 40 per cent since January, warned investors last week its profits would almost halve in 2024 due to its main brand’s Gucci weak performance.
Prada represents one of few exceptions among the largest luxury groups, alongside Hermès, and it has continued to record strong growth in the Asia Pacific region including in Japan and in the Middle East throughout the year.
Chief executive Andrea Guerra said he expected the group to continue in its “above-market” growth trajectory but the group conceded that while sales growth had remained “high” in Japan over the third quarter, there was a “deceleration” compared to the previous quarter without releasing specific figures.
The company also warned that market conditions in Asia Pacific, where sales have climbed by 12 per cent in first nine months of the year, were becoming “more challenging”.
Prada’s net revenues were up 18 per cent to €3.8 billion (US$4.13 billion; S$5.47 billion) in the first nine months of the year.
In the nine months to the end of September, the Italian group’s sales grew by 53 per cent at constant exchange rates in Japan fuelled by “solid internal demand and strong tourist flows”.
“We are operating in a challenging environment for the entire luxury value chain,” said Prada group chair Patrizio Bertelli. “Nonetheless we continue to see opportunities for our brands and we remain committed to our investment plan in retail, technology and industrial capabilities.”
The group’s Miu Miu brand, which is named after its founder and creative director Miuccia Prada, was long considered “Prada’s little sister”, catering to younger consumers at a lower price tag.
However more recently it has consistently outshone the main Prada brand through its experimental designs, successfully expanding its reach to a more diverse group of consumers of all ages. Its micro skirts and sequinned knickers, which sell for as much as €4,000, have been sported by young Asian influencers and Hollywood celebrities like Nicole Kidman.
The label’s chief executive, Benedetta Petruzzo, was poached last month by LVMH-owned Dior. She is yet to be replaced.
Silvia Sciorilli Borrelli © 2024 The Financial Times
This article originally appeared in The Financial Times