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Prada has reported a strong start for 2022 and confirmed to Reuters its medium-term growth targets. However, the company said that the war in the Ukraine make any prediction uncertain.
Prada, following other leading brands, suspended its retail operation in Russia. The action was taken after the European Union imposed strict economic sanctions on Russia in response to Russia’s invasion of Ukraine. Russia accounted for about 2% of Prada’s total sales in 2021, the company said.
2021 Sales rose 41% to €3.36 billion compared with €2.42 billion in 2020. Revenues in 2021 rose 8% compared to 2019. CEO Patrizio Bertelli said at the time of the release of sales that “2021 was a year full of challenges but we proved to be ready and quickly responded to the needs of an extremely dynamic market, putting in place actions that allowed us to understand changes in consumer behavior effectively.” Operating profit in 2021 rose 14.5% of total sales, up from 9.5% in 2019, before the pandemic started.
Earnings of 2021 were above expectations. Earnings before interest and taxes jumped to €489 million from €20 million in 2020 and €307 million in 2019, Analysts expected €429 million according to a Refinitiv consensus report.
The company posted a medium-term revenue goal of €4.6 billion. Management also indicated a target of 20% operating profit of total sales in the medium term. It has recently confirmed the projection.
Prada is family owned and is known for its minimalist designs and was in a shift to upmarket to revive sales when the coronavirus shut stores around the world. Prada attracts a lot of tourist trade. The company has now reduced its wholesale business and is concentrating on improving upscale store sales by focusing on full-price sales.
The Milan based company is listed on the Hong-Kong exchange. The company said it is proposing a dividend of €0.07 per share, with a payout ratio of 61%.
POSTSCRIPT: Prada’s quick comeback is a credit to CEO Bertelli’s drive. Even without the Russian sales it is likely that the company will again exceed expectations in 2022. The company now focuses on full-price sales and is likely to dispose aged merchandise by selling it to other outlets, probably without the Prada label.
(€1=$1.09 on March 14,2022)
Source: https://www.forbes.com/sites/walterloeb/2022/03/15/prada-has-a-strong-start-in-2022/