Patrizio Bertelli: «Medium-term targets confirmed»

After a «very promising» start to the year and 2021 profits which exceeded expectations, Prada confirms its medium-term growth targets. During the conference call with analysts, the top management of the Milan-based Group stated that January and February boasted a very strong performance in line with a brilliantly closed financial year with 3.36 billion euros of total revenues, a 41% increase year-on-year and an 8% growth compared to 2019. The last financial year was supported by full-price sales, local consumption and retail revenues amounting to 2.93 billion euros, with a double-digit growth on both 2020 (+40%) and 2019 (+15%). The second half of the year’s performance contributed decisively, ending with a strong acceleration of 16% on 2019, with +24% in the fourth quarter alone.

Online sales recorded an important growth as well, quintupling their volumes in two years and reporting a +61% compared to 2020. The impact of e-commerce on total retail revenues is now 7%. Wholesale, on the other hand, recovered 41% on last year, although it is still at -29% compared to 2019, in line with the Group's selective policy and channel rationalization strategy. «The first months of 2022 were very promising for the Prada Group. The long-term strategy continues, based on the distinctive identity of our brands Prada, Miu Miu and Church's, product quality, industrial know-how, focus on direct distribution and sustainability», Patrizio Bertelli, CEO of the Group, stated. «We took decisive action to address the needs of a constantly evolving luxury market, although it is still difficult to assess the war in Ukraine’s impact on the global economy».

Gross margin improved dramatically, reaching 75.7% for the year and 76.8% in the last six months, while operating profit increased to 489 million euros, accounting for 14.5% of annual revenues and 17.4% in the last six months. «At the beginning of 2021, Covid-19’s impact was still strong, then the market recovered in the second half of the year. We confirm a gross margin of 78% for 2022», Alessandra Cozzani, CFO of Prada, stated. Net income amounted to 294 million euros, 8.8% of revenues, with operating cash flow at 751 million euros and capex at 216 million euros. The net working capital’s management was excellent, down by 10% on 2020. Finally, thanks to strong cash generation, the net financial position also improved significantly, rising to 238 million euros from 311 million euros in December 2020.

An excellent performance was recorded across the board in all product categories. Geographically, sales in Europe amounted to 749 million euros, recovering 35% on 2020 although still 11% below 2019. In the second half of 2021, however, the trend returned to positive territory with +2% on 2019 and a marked improvement in all countries. Asia Pacific recorded a growth of 29% on 2020 and 30% on 2019, with sales amounting to 1.19 billion euros. The full year was characterized by «outstanding» demand in the region's main markets, including China (+56% on 2019), Korea (+90%) and Taiwan (+61%). On the other hand, revenues from Japan, affected by prolonged restrictive measures due to the pandemic, stood at 297 million euros, +16% on 2020 and -17% on 2019.

Revenue generated in America, amounting to 572 million euros, showed an excellent performance throughout the year, at +103% on 2020 and +69% on 2019. The Middle East achieved revenues of 121 million euros, up by 62% on 2020 and 43% on 2019. On the other hand, management did not elaborate on the situation in the Eastern European market. «We are keeping the situation monitored in Russia. We have stopped all our activities and withdrawn products from stores», CFO Cozzani continued. «The Russian market’s incidence on our turnover is not significant, it is around 1.5-2%, so we do not foresee a problematic impact».

The Board of Directors then resolved to propose the distribution of a dividend of 0.07 euros per share, for a total of 179 million euros, equal to a pay-out ratio of 61%. Finally, Lorenzo Bertelli, Head of Corporate Social Responsibility of the Group, recalled the progress achieved in the field of ESG and, when questioned again by analysts about a possible interest in YNAP, replied: «I cannot comment right now. Things are moving, but I cannot add anything else, especially in view of the current situation, which suggests caution». (all rights reserved)