Prada points to pent-up luxury demand with 2021 sales surge
By Claudia Cristoferi
MILAN (Reuters) -Prada sales bounced back sharply in 2021 as pent-up demand for luxury handbags and clothes helped push revenues above pre-pandemic levels, the Italian fashion group said.
In an unscheduled trading update, Prada said on Tuesday that group sales last year rose 41% at constant exchange rates to 3.364 billion euros ($3.83 billion), 8% above 2019 levels.
Milan-based Prada, known for its minimalist designs, was in the middle of a shift upmarket and online to revive sales when the coronavirus crisis hit, forcing retailers to shut stores around the globe and depriving them of key tourist spending.
But like other luxury groups Prada has emerged strongly from the pandemic thanks to a desire among cooped-up consumers to pamper themselves with high-end purchases. These have not been hit by the same supply chain snags as some other products given that the luxury industry produces mainly in Europe.
Prada is the first major luxury group to release results in 2022, with Richemont and Burberry due on Wednesday and LVMH next week.
In November, Prada set itself a medium-term sales goal of 4.5 billion euros and the figure for 2021 was above an estimate of 3.28 billion euros in an analyst consensus cited by UBS.
The Hong Kong-listed group, which had not been due to disclose full-year results before March, said sales had particularly accelerated in the second half of last year thanks to its retail network, which grew by 27% compared to 2020 and by 21% compared to 2019, including e-commerce.
Core profit also showed a "significant increase" in the second half of 2021 thanks to a higher contribution from the retail channel and a full-price policy, while the group had a "sound net financial surplus" at the end of 2021, it added.
"The Prada Group has the capabilities and resources to set itself apart and deliver on its future growth objectives," said Chief Executive Officer Patrizio Bertelli, who said in November he could hand over the running of the family-owned fashion house to his son Lorenzo in three to four years time.
While Prada's 2021 sales are still below a record 3.6 billion euros in 2013 and growth rates lag industry leaders Louis Vuitton and Hermes, the recovery has been accelerating and analysts say momentum for the Italian brand is strong.
UBS analysts estimate that barring a nasty surprise in the final quarter, listed luxury goods companies will end 2021 with an average 30% sales increase at constant currencies, which strip out the effect of exchange rate fluctuations, with group sales exceeding the 2019 level by around 10%.
(Editing by Silvia Aloisi and Alexander Smith)