Prada highlights pent-up demand for luxury with surge in sales in 2021

MILAN, Jan 18 (Reuters) – Prada sales rebounded strongly in 2021 as pent-up demand for luxury handbags and clothing helped lift revenues above pre-pandemic levels, said the Italian fashion group.

In an unscheduled business update, Prada said on Tuesday that the group’s sales last year rose 41% at constant exchange rates to 3.364 billion euros ($3.83 billion), 8% in above 2019 levels.

Milan-based Prada, known for its minimalist designs, was in the midst of a move upmarket and online to boost sales when the coronavirus crisis hit, forcing retailers to close stores around the world and leaving them major tourist expenditure.

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But like other luxury groups, Prada has emerged strong from the pandemic thanks to a desire among locked-down consumers to indulge themselves with high-end purchases. These have not been hit by the same supply chain issues as some other products, given that the luxury industry mainly produces in Europe.

Prada is the first major luxury group to report results in 2022, with Richemont and Burberry (BRBY.L) due on Wednesday and LVMH next week.

In November, Prada had set a medium-term sales target of 4.5 billion euros and the figure for 2021 was higher than an estimate of 3.28 billion euros in an analyst consensus cited by UBS .

The Hong Kong-listed group, which was not due to report full-year results until March, said sales accelerated particularly in the second half of last year thanks to its distribution network, which grew 27% from compared to 2020 and 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 distribution channel and a full price policy, while the group had a “good net financial surplus” at the end of 2021, said he added. .

“The Prada group has the capabilities and the resources to stand out and achieve its future growth objectives,” said chief executive Patrizio Bertelli, who said in November that he could hand over the management of the family fashion house to his son Lorenzo. in three to four years. Read more

While Prada’s sales in 2021 are still below the record of 3.6 billion euros in 2013 and growth rates are below industry leaders Louis Vuitton and Hermès, the recovery has accelerated and the analysts say the momentum of the Italian brand is strong.

UBS analysts estimate that barring a bad surprise in the last quarter, listed luxury companies will end 2021 with an average increase of 30% in sales at constant exchange rates, which eliminates the effect of fluctuations exchange rates, with group sales exceeding the 2019 level by around ten%.

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Editing by Silvia Aloisi and Alexander Smith

Our standards: The Thomson Reuters Trust Principles.

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