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Prada Returns to Profit in 2021, Reports Strong Retail, Online Acceleration in H2

MILAN – Prada SpA touted a very strong second half of 2021, as it posted a return to profitability touted a sharp acceleration in retail sales, including online, and a growth in all product categories, especially in the Americas and Asia-Pacific markets.

In the 12 months ended Dec. 31, net profit climbed to to 294 million euros compared with a net loss of 54 million euros in 2020. In 2019, net profit amounted to 256 million euros, but that figure was lifted by the Patent Box tax benefit.

In 2021, revenues totaled 3.36 billion euros, climbing 41% from 2.42 billion euros in 2020. Compared with 2019, sales rose 8%. In the second half of 2021, sales grew 16% compared with the same period in 2019.

“The Prada Group’s start to 2022 has been strong,” said CEO Patrizio Bertelli. “Our long-term strategy is on track, focused on distinctive brand identity, product quality and industrial know-how, direct distribution and sustainability at the core of our values. Decisive actions to evolve the business and navigate the changing luxury market drove outstanding growth and increased profitability in 2021.”

Based on these results, Bertelli expressed “confidence to achieve our medium-term targets, even though it is difficult to predict the impact of the Ukraine conflict on the global economy. Our concern is for all our colleagues and their families affected by the war, for the local communities and all people suffering and we will continue to support them.” As reported, Prada suspended its retail operations in Russia earlier this month.

In 2021, retail sales climbed 40% to 2.93 billion euros compared with 2020, and 15% compared to 2019. The growth last year was driven by full-price sales and local spending with a strong acceleration in the second half of 2021. The trend further accelerated in the year as the group’s retail sales the fourth quarter rose 24% compared with the same period in 2019.

Online sales accounted for 7% of retail sales, growing fivefold compared with 2019. Compared with 2020, they rose 61%.

At constant exchange rates, the wholesale channel registered a 41% increase to sales of 386 million euros. Compared to 2019, wholesale revenues were down 29%, in line with the group’s strategy to rationalize the channel.

Operating profit amounted to 489 million euros, or 14.5% of revenues, compared with 20 million euros in 2020.

By geographies and at constant exchange rates, sales in Europe stood at 749 million euros, up 35% compared with 2020 and down 11% compared to 2019. However, the group saw a positive change in the sales trend in the second half, reporting a 2% growth compared with the same period in 2019.

Sales in Asia-Pacific amounted to 1.19 billion euros, up 29% compared with 2020 and up 30% compared to 2019.  There was sustained demand in key markets throughout the period compared with 2019 as sales in China were up 56%. Sales in Korea and Taiwan rose 90% and 61% respectively.

The Americas saw a sharp increase in sales throughout the year, amounting to 572 million euros, up 103% compared to 2020 and climbing 69% compared to 2019.

Revenues in Japan, impacted by prolonged restrictions related to the pandemic, stood at 297 million euros, up 16% compared to 2020 and down 17% compared to 2019.

Sales in the Middle East totaled 121 million euros, up 62% compared to 2020 and up 43% compared to 2019, also thanks to some resumption in tourism.

In 2021, operating cash flow totaled 751 million euros, and Prada reported a gross margin of 75.7%, reaching 76.8% in the second half.

Capital expenditures amounted to 216 million euros,

The net financial position stood at 238 million euros, significantly improving from a negative 311 million euros at the end of December 2020.

The board is proposing to distribute a dividend of 7 cents per share, equivalent to 179 million euros, with a payout ratio of 61%.

In 2021 the group accelerated its commitment to Environmental Social Governance, launching its climate strategy and appointing sustainability experts Pamela Culpepper and Anna Maria Rugarli to the board, formalizing an ESG Board Committee. In the year ahead, the group will further commit on ESG across the business and update on strategy and developments.

Prada, which is part of the Fashion Pact, during its Capital Markets Day in November revealed that its greenhouse gases emissions reduction targets had been approved by the Science-Based Targets initiative and that its goal was to reach net-zero emissions in 2050.  In 2022, Prada began its carbon-neutral scope 1 and 2, aiming at a 29% cut in GHG emissions by 2026, and a 42% reduction by 2029.

This story was reported by WWD and originally appeared on WWD.com.

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