Prada : What Went Wrong?

[Zazie]

Prada used to be The Quirky collection, along with a more mode Marni, but the New Quirky is now defined by Gucci. I thought Gucci was great when it debuted with Michele, but I got really tired of it. Still, it's going strong, and is now the most directional.

To regain its mojo, Prada needs to go back to its roots, and then go crazier. It used to do really fun stuff, like the robot necklaces, etc. It needs to go more extreme than that.It also got stuck with a certain look; a certain silhouette, that Anna Wintour silhouette. Fendi, Loewe, LV, and just about everyone dashed with the craziest new bags ideas, and Prada unfortunately missed the boat and stuck to its boxy old lady bags.

Prada needs to hire a crazier new designer to assist Miuccia, like ...hmm...me, haha...

It was never really "intellectual", but now, ironically, Gucci is looking like "Wes Andersen" intellectual.

I'd love for Prada and MiuMiu to give Gucci and all the new ugly-crazies (Balenciaga, LV, etc.) a run for their money.

 

[Zazie]

I'm going against the grain by suggesting also that she should NOT go back to the lips and banana prints. It's too pedestrian and déja vu. Instead, the type of graphics she should go for ought be be more like say, Jan Bajtlik's.

Now that's "intellectual" quirky fashion that I prefer over Gucci's.

 

[Zazie]

Sorry to do multiple posts but I'm having technical glitches.

I mean, forget these frumpy Gucci Vêtements flowers and JW Anderson stripes like in her Resort 2020. To be a fashion leader you don't follow, you don't go back, you need to come up with something crazy but new and completely desirable.

 

[Nomar]

The thing with Prada is that it feels like they are just one step behind every other brand and this probably due to the influx of younger designers who have taken the reins of big fashion houses. Therefore, it feels like everything Prada does in response is sort of like a desperate attempt or gimmick to keep up.

I also think that it has got a lot to do with consumer trends and while I'm sure they still have their die-hard Miuccia fans who love all that conceptual and intellectual stuff (I'm guilty of it myself), they're also probably a more mature demographic. The reality is that most millennials don't care about that, which is a shame in my opinion. Anyway, I still have hope for Prada and I really want them to turn things around while still being true to brand.

 

[dodencebt]

All these pointless analysis and suggestions and yet no one dares say that Miuccia's designs are also part of the downfall.

The Path to a Better Prada

MILAN, Italy – Prada has suffered through some tough years after a series of strategic missteps, but has lately taken measures to get back on track. The Italian luxury group recently announced its plans to further reduce wholesale exposure. This follows on a decision to stop promotions within its full-price retail stores. Both are commendable steps to achieve better price discipline, a key requirement for maintaining long-term brand equity.

Prada has also announced that it will stop selling fur. This comes on the back of moves to mend past merchandising mistakes: bringing back nylon and entry price handbags; increasing the number of leather goods styles and re-focusing on newness; and moving sneakers centerstage and relaunching the sporty "Linea Rossa".

Yet Prada remains a step (or two) behind its peers. And a look back at the last five years shows the brand has too often been behind the curve. Prada was opening stores when competitors were already trimming their retail networks. Prada was the last of the Mohicans to recognise digital as a strategic priority. Prada is now sponsoring the America’s Cup sailing competition, after Louis Vuitton concluded that its own sponsorship of the event was no longer effective.

When was the last time that Prada invented something new that competitors stood back and admired? This is all the more striking, as Prada was once perfectly in tune with the zeitgeist and a pioneer in many areas, for example, bringing streetwear and sport to luxury more than 20 years ago; counter-standardising its flagship stores when others were cookie-cutting; embracing minimalism; and the list goes on.

But Prada has become a follower and a follower makes no money. Indeed, it is not surprising that the brand’s operating performance has been disappointing. No matter which mature industry one examines: the #1 player has high profit margins; the #2 has decent profit margins; the #3 is breaking even. Luxury is still nascent, fragmented and favoured by strong underlying demand trends, so it is a bit more forgiving. But Prada’s underperformance versus peers has been painfully clear. (The correct decision to reduce wholesale exposure at a time when retail is not in a position to make up for it is causing further downward earnings revisions).

So, what's next for Prada? Organisational development is key. Prada would benefit from a decisive organisational upgrade. A stronger management team to implement the founders’ vision would benefit the business. A stronger merchandising and brand management capability would also help put Prada back on the map.

The accelerating speed and escalating complexity of the luxury industry are challenging traditional management formats. Empowerment, teamwork and risk-taking are vital to staying ahead of competitors. Highly centralised decision-making — while possibly superior when it comes to major strategic steps — risks stifling innovation, delaying action and remove accountability in day-to-day operations.

To be sure, there is a path to a better Prada. We see no obvious structural reasons why the brand couldn’t come back, provided the company creates the right context. Of course, Prada is smaller than Louis Vuitton and Gucci, and scale is important as costs balloon. Yet, Moncler is a powerful example of what a small business can achieve when it is forward-looking and focused the right metrics: space productivity and brand equity enhancement.

We don’t think Prada is likely to be taken over — not because of a lack of suitors, but because its controlling shareholders would not sell at this level. Improvement has to come from within. We believe the most promising signal to the market would be a management upgrade and overhaul.

businessoffashion.com

 

[Norden]

I agree. This is a lot of analysis. Surely they’re right about the management structure etc. but the core of the issue is the desirability and pricing of the product, which indeed comes to down to miucca and her team. Further more I believe that the culture surrounding Prada is really watered down. We know it stands for something intelligent and informed by the art world, the problem is those people and that culture has moved on. And she hasn’t. I was at fondazione Prada last week and they had all this rich people art on display, Jeff koons, etc. and for me it just showed how out of touch it all is.

 

[Lola701]

The irony of BOF or any publication saying that Prada is a follower and hasn’t done something new in years.... Whereas their editors has been kissing Prada’s a** for years.
Prada is so out of touch that they are releasing Linea Rossa when the streetwear trend is dying.
They discontinued the Wingtip which were in stores for almost 7 years...At a time when the chunky shoe (they pioneered) is the biggest trend ever.

How do you sell? Better collections, better pricing (Prada is overpriced IMO) and a much more simple communication.
Nobody cares about the Art if it doesn’t have a direct connection with the clothes.

People cares about the BTS, the Atelier, the designer. Prada’s elusive and super elitist communication is off when all the brands are all about their talents.

Even a brand like Fendi which has it hard doing fur at a time when everybody is kinda ashamed of it. They have found a way, through their Atelier to make it into something artistic.

Prada is still uninviting.

 

[Benn98]

All these pointless analysis and suggestions and yet no one dares say that Miuccia's designs are also part of the downfall.

If not the most important part of the disconnect! It's not only Prada's publicity machine or their price point which is problematic, it really starts with the design. When you look at Gucci, Balenciaga, SLP, they all share a defined design aesthetic in terms of clothes which is not tailored to appeal to everyone, and yet it is immensely successful. But Miuccia shifts between a youthful and hyperfeminine collection one season, something for more mature women the next, and a bone for the hypebeast sect thereafter. She can't court and connect with a distinct audience. And the menswear is even more disjointed.

Actually, when you look at the amount of coverage Prada gets - equal campaign page count as Gucci and more than SLP and Balenciaga, equal if not more magazine covers as the other three, more diversified print and digital platforms to advertising (I mean, they are often the only brand to advertise in Art Times or Wallpaper, which concentrates the exposure of that publication)....you have to realise that there's so much wrong with this brand if they're not on the forefront of consumers.

 

[bc collector]

I agree that the real issue here is with a lack of design newness rather than management structure and price points, but I want to try and see things with a bit more of perspective here, taking a few steps back to get the whole picture.

I can't think of any designer, apart from Miuccia (and Nicolas Ghesquiere), who's been so influential and at the top of their game for such a long time. We all know how energy and creatively consuming the fashion industry has became over the last two decades, burning "new" designers out at the speed of light.
Yet, we are all here pointing our fingers at Miuccia for not being able to be the best of the class thirty years after her debut in fashion (can someone name here a single other designer who kept such creative consistency for so long? Even poor old YSL in the late eighties and nineties was redoing himself).
Even if it's listed in HK stock exchange, Prada was and remains at heart a family business were decisions are not always (actually hardly ever) taken for strictly calculated marketing reasons, but following a certain gut instinct or investing in personal interests of the Bertelli/Prada household: Bertelli is a sailing buff and started investing in Luna Rossa in 1996, I believe, way before the LVMH group jumped on that bandwagon (and I don't seem to remember that Mr Arnault has any particular interest in the discipline - Luca Solca from BoF might have taken notice before writing the piece); so was the Fondazione Prada, started in 1993, to expose the art collection the couple had already amassed and introduce new artist to the scene in Milan (needless to say, both the Kering Group, with the acquisition of Palazzo Grassi in Venice, and LVMH, with the Louis Vuitton Art Foundation, came after, and again, both operations smacked of marketing stunts rather than gestures motivated by pure interest in the arts). And I could go on...

This family pattern applies also to the creative team: I don't think anything is going to change any time soon because the core team (Fabio Zambernardi, head of design; Oliver Rizzo and Katy Grand and so on) are almost considered part of the family, they will not be dismissed from one day to the next, there are personal links to be taken into consideration.
As for the comparison with the other brands, brands that surely thrive on more agressive managerial strategies, let's see: Alessandro Michele is on a creative loop, five years into his tenure his collections don't surprise anyone anymore, apart from the legions of Chinese fuccbois that can't have enough of the logoed hoodies and tees they sell as fashion. Don't even get me started with Balenciaga or SLP...

We have to decide what road to follow here: either we like something because it sells, so you can have all the Gucci you want; or we have to accept that creative people are not machines and accept that their flow of ideas might ebb once in a while.

One last suggestion: is it possible that there is a limit to how much a fashion company, especially one focused of creating new concepts and with a high level of taste, can expand? Are there so many customers, globally, who can really understand the work of Miuccia, or Phoebe for that matter (and it is no secret that the sales of Céline RTW were stalling before PP left)? Do all the brands really have to turn into providers of branded merchandise for dumb millennials in order to stay competitive in the market?

In short: when will creative sustainability be part of this conversation?

 

[tigerrouge]

From my perspective, Prada was always a case of the Emperor's New Clothes, successful because its mythos was propped up for decades by a cabal of fashion editors incessantly promoting the brand as something truly special, and if you fancied yourself as a discerning fashionista, you happily bought into it.

But now that fashion media is an open field, and print no longer has a stranglehold on how messages are communicated to the consumer, Prada has lost its ability to maintain this artificial environment that's all about "the select few" perceiving some deeper truth in the brand's products.

A very long time ago, as an impressionable teen, I can remember constantly reading about the brand in Vogue, and travelling many miles in order to source one of these legendary Prada bags, and walking into the store... only to find it was a cheap plastic satchel, and there was nothing special about this nylon product, other than what the logo was supposed to say about me. I defected to Louis Vuitton and spent my money on a leather bag that still looks great today.

That was the time of Tom Ford's Gucci, I remember looking at the thongs.

 

[Lola701]

I agree that the real issue here is with a lack of design newness rather than management structure and price points, but I want to try and see things with a bit more of perspective here, taking a few steps back to get the whole picture.

I can't think of any designer, apart from Miuccia (and Nicolas Ghesquiere), who's been so influential and at the top of their game for such a long time. We all know how energy and creatively consuming the fashion industry has became over the last two decades, burning "new" designers out at the speed of light.
Yet, we are all here pointing our fingers at Miuccia for not being able to be the best of the class thirty years after her debut in fashion (can someone name here a single other designer who kept such creative consistency for so long? Even poor old YSL in the late eighties and nineties was redoing himself).
Even if it's listed in HK stock exchange, Prada was and remains at heart a family business were decisions are not always (actually hardly ever) taken for strictly calculated marketing reasons, but following a certain gut instinct or investing in personal interests of the Bertelli/Prada household: Bertelli is a sailing buff and started investing in Luna Rossa in 1996, I believe, way before the LVMH group jumped on that bandwagon (and I don't seem to remember that Mr Arnault has any particular interest in the discipline - Luca Solca from BoF might have taken notice before writing the piece); so was the Fondazione Prada, started in 1993, to expose the art collection the couple had already amassed and introduce new artist to the scene in Milan (needless to say, both the Kering Group, with the acquisition of Palazzo Grassi in Venice, and LVMH, with the Louis Vuitton Art Foundation, came after, and again, both operations smacked of marketing stunts rather than gestures motivated by pure interest in the arts). And I could go on...

This family pattern applies also to the creative team: I don't think anything is going to change any time soon because the core team (Fabio Zambernardi, head of design; Oliver Rizzo and Katy Grand and so on) are almost considered part of the family, they will not be dismissed from one day to the next, there are personal links to be taken into consideration.
As for the comparison with the other brands, brands that surely thrive on more agressive managerial strategies, let's see: Alessandro Michele is on a creative loop, five years into his tenure his collections don't surprise anyone anymore, apart from the legions of Chinese fuccbois that can't have enough of the logoed hoodies and tees they sell as fashion. Don't even get me started with Balenciaga or SLP...

We have to decide what road to follow here: either we like something because it sells, so you can have all the Gucci you want; or we have to accept that creative people are not machines and accept that their flow of ideas might ebb once in a while.

One last suggestion: is it possible that there is a limit to how much a fashion company, especially one focused of creating new concepts and with a high level of taste, can expand? Are there so many customers, globally, who can really understand the work of Miuccia, or Phoebe for that matter (and it is no secret that the sales of Céline RTW were stalling before PP left)? Do all the brands really have to turn into providers of branded merchandise for dumb millennials in order to stay competitive in the market?

In short: when will creative sustainability be part of this conversation?

I can think of Karl...Who was at the top of his career consistently for more than 40years...
It’s interesting that you’re mentioning Nicolas because I think it’s a good case.

Nicolas made a name of himself by doing something very elitist and speaking to a very tight audience. As his hype grew, the clothes became more exclusive, the editing of the collection was beyond and even down to the audience...Less and Less people as the years went by at Balenciaga. The success was there.

Now, we are in a different era and he has opened more. More communication, more exposure, more looks...
You have to be at the same scale as the brand you’re working for.

I’m sure people are more obsessed about Miuccia Prada than they are about the Foundation... As people were much more obsessed about Nicolas than his collaboration with Dominique Gonzales Foerester.

Tbh, my highlight of any Prada show is to see what Miuccia is wearing. Identification is more than spirit nowadays. The fantasy of the Art Galerist wearing Prada is long gone. Now, people knows how tacky the Art World can be.

Prada has a rich history. They should use it more in their narrative.

 

[bc collector]

I can think of Karl...

I was sure the name of Lagerfeld would come up. I'm sorry if I sound disrespectful towards Karl's oeuvre, especially in the wake of his recent passing, but, strictly on design terms and the influence his work exerted in the market at large, I can't put him in the same league as Miuccia or Nicolas. He surely was the super smart, cultivated man we all know and that allowed him to keep his creative flow going over the years, but at a very superficial level. He changed the history of fashion more for operational reasons than for the impact of his designs.

As for Nicolas, I confess I am not entirely satisfied with his work at LV, simply because he's essentially an apparel designer and LV is essentially an accessories house. I acknowledge the the marriage was financially fruitful and his audience has grown exponentially. I don't think thirty years or more from now we will remember his name because of his work at Vuitton. He remains a genius but somewhat constricted by the fact that he's in the wrong place. Which is the reason why I am curious to see whether la maison Ghesquiere will ever see the light of day...

 

[Norden]

You make really valid points, I myself work as a creative in the design industry, with a more forgiving calendar than fashion. It’s unsustainable to expect a designer to churn out desirable product each and every time. However, the case with Prada is complex. When the design team is in a weaker phase or when the zeitgeist is simply shifted elsewhere - a clear identity and expression of culture are a saving grace. This I feel lacks at Prada and is not helped by collections which radically change every season. I want to compare this to rick Owens for a moment, at rick the culture is very clear. It’s further built on with furniture and exhibitions. Even when the zeitgeist is not in his favor like the last 5 years, he still maintains relevancy due to the clarity of the brand.

Prada is throwing a lot of items against a wall to see what sticks, this omnichannel and everything goes approach is not working and isn’t creating any real engagement with consumers. They might have instigated beautiful ideas as pioneers, but now they feel lost in the confusion that is Prada. It makes me sad, because I love the brand. But the reality is, I haven’t bought anything or cared the last 5 years. And it seems I’m not alone in this.

The family structure is beautiful and unique, but it can also be a hermetic echo chamber.

I agree that the real issue here is with a lack of design newness rather than management structure and price points, but I want to try and see things with a bit more of perspective here, taking a few steps back to get the whole picture.

I can't think of any designer, apart from Miuccia (and Nicolas Ghesquiere), who's been so influential and at the top of their game for such a long time. We all know how energy and creatively consuming the fashion industry has became over the last two decades, burning "new" designers out at the speed of light.
Yet, we are all here pointing our fingers at Miuccia for not being able to be the best of the class thirty years after her debut in fashion (can someone name here a single other designer who kept such creative consistency for so long? Even poor old YSL in the late eighties and nineties was redoing himself).
Even if it's listed in HK stock exchange, Prada was and remains at heart a family business were decisions are not always (actually hardly ever) taken for strictly calculated marketing reasons, but following a certain gut instinct or investing in personal interests of the Bertelli/Prada household: Bertelli is a sailing buff and started investing in Luna Rossa in 1996, I believe, way before the LVMH group jumped on that bandwagon (and I don't seem to remember that Mr Arnault has any particular interest in the discipline - Luca Solca from BoF might have taken notice before writing the piece); so was the Fondazione Prada, started in 1993, to expose the art collection the couple had already amassed and introduce new artist to the scene in Milan (needless to say, both the Kering Group, with the acquisition of Palazzo Grassi in Venice, and LVMH, with the Louis Vuitton Art Foundation, came after, and again, both operations smacked of marketing stunts rather than gestures motivated by pure interest in the arts). And I could go on...

This family pattern applies also to the creative team: I don't think anything is going to change any time soon because the core team (Fabio Zambernardi, head of design; Oliver Rizzo and Katy Grand and so on) are almost considered part of the family, they will not be dismissed from one day to the next, there are personal links to be taken into consideration.
As for the comparison with the other brands, brands that surely thrive on more agressive managerial strategies, let's see: Alessandro Michele is on a creative loop, five years into his tenure his collections don't surprise anyone anymore, apart from the legions of Chinese fuccbois that can't have enough of the logoed hoodies and tees they sell as fashion. Don't even get me started with Balenciaga or SLP...

We have to decide what road to follow here: either we like something because it sells, so you can have all the Gucci you want; or we have to accept that creative people are not machines and accept that their flow of ideas might ebb once in a while.

One last suggestion: is it possible that there is a limit to how much a fashion company, especially one focused of creating new concepts and with a high level of taste, can expand? Are there so many customers, globally, who can really understand the work of Miuccia, or Phoebe for that matter (and it is no secret that the sales of Céline RTW were stalling before PP left)? Do all the brands really have to turn into providers of branded merchandise for dumb millennials in order to stay competitive in the market?

In short: when will creative sustainability be part of this conversation?

 

[Lola701]

I was sure the name of Lagerfeld would come up. I'm sorry if I sound disrespectful towards Karl's oeuvre, especially in the wake of his recent passing, but, strictly on design terms and the influence his work exerted in the market at large, I can't put him in the same league as Miuccia or Nicolas. He surely was the super smart, cultivated man we all know and that allowed him to keep his creative flow going over the years, but at a very superficial level. He changed the history of fashion more for operational reasons than for the impact of his designs.

As for Nicolas, I confess I am not entirely satisfied with his work at LV, simply because he's essentially an apparel designer and LV is essentially an accessories house. I acknowledge the the marriage was financially fruitful and his audience has grown exponentially. I don't think thirty years or more from now we will remember his name because of his work at Vuitton. He remains a genius but somewhat constricted by the fact that he's in the wrong place. Which is the reason why I am curious to see whether la maison Ghesquiere will ever see the light of day...

Yes...Maybe.
I think it's all in a point of view. I'm personally interested in his contributions in design than in other things so, i have a different take and even some controversial ones on his oeuvre. To tell you, i think he was better than YSL...The only thing is that he never anyone to tell us his mythology. For me, he is the king of Flou and he is Franco Moschino before Moschino. It's his fault if his legacy as a designer is not preserved. Out of more than 50 years of career, we only know like what 10% which were late in his life. Maybe his talent as a designer will be recognized later.

Prada is a tricky one. For the mass, the highlight of her career is maybe the 1996 bad taste collection or SS2000, which imo are not at all her best collections but solidified her position as a designer's designer. But to be honest, the late part of the 90's was dominated either by Tom Ford or Helmut Lang. Even if she is a fabulous designer, she never had the influence of a Nicolas Ghesquiere who truly changed the way people dress in the middle of the 00's or even a John Galliano at Dior or Tom Ford at Gucci.

Miuccia is the kind of designer in which we go back in time and see how timeless or ahead of her time she was. That's for example how i feel about her first ever collection. She is a bit like Margiela but on bigger scale.

Don't have too much faith on Nicolas. The fireworks and the highlights of his career was at Balenciaga. It will never be as good as what you expect.

But to go back to Miuccia i think, as you asked if there's a limit to expand, that Bertelli's strategy from the start was complicated because their business model didn't changed organically. They were forced to change.
He made bad decisions with Helmut Lang and Jil Sander...
The business model with Prada was simple: Miuccia had that platform of the runway, expressing her ideas, delivering strong collections and Bertelli focused on the bread and butter which was The black and blue Nylon. In the middle of that, Prada always delivered a shoe of the season or a bag of the season. She defined trends but people didn't necessarly went to Prada for the trend (the lace collection).

The runway show was to Prada what Couture was to Dior for example. But time changed and suddenly, people wanted to wear Couture. So the Maisons started to go back to the essence of Couture. Now everybody is making money out of it. Most of the brands now are selling clothes. Everybody has changed their strategy. That's how you have a Nicolas Ghesquiere at Vuitton.

You talk about her team...She needs to change something! Pavesi is not there anymore and it shows more and more how influencial she was.

Bertelli obviously wanted Prada to be big. That's why he went on competition with LVMH to buy Fendi, that's why he tried his minigroup with Lang, Sander and Alaia, that's why he changed the strategy for MiuMiu in 2006 and that's why he put the brand in the stockmarket.
They could have been just fine if they stayed like Dolce & Gabbana. And now, their biggest market is not so welcoming.

When you pride yourself to be anti-conformist, it's better to stay your lane than copying what's going on. And it's kinda sad because being themselves actually helped them going through the crisis in 2008.

 

[dodencebt]

Finally some good news for them!

Prada Profits Jump 46.6% in H1

MILAN — Full-price sales, a positive trend in wholesale and a strong performance of its ready-to-wear and footwear collections helped Prada SpA see gains in profits and revenues in the first half of the year.

In the six months ended June 30, net profits jumped 46.6 percent to 155 million euros, benefitting from the Patent Box tax relief relating to the years 2015-2019. In the same period last year, profits totaled 105.7 million euros.

Sales rose 2 percent to 1.57 billion euros compared with 1.53 billion euros in the prior year. At constant exchange rates, revenues were flat.

“Our strategic decision to stop seasonal markdowns and to rationalize the wholesale channel has been well-received by the market: Full price retail sales increased across the main geographies and product categories, reflecting the soundness of our choice," said chief executive officer Patrizio Bertelli. "We believe that improving consistency in pricing will reinforce the relationship with customers and enhance product value. Our Prada and Miu Miu collections are receiving significant appreciation from the market, confirming the strength of our stylistic leadership. We are strongly committed to driving digital technology across the business, leading to more efficient-decision making, as we are aware that digital innovation is key to compete in an evolving market. Executing this program is the necessary step towards sustainable revenue and margin growth, which we will target by strengthening our brands’ cultural heritage — essential to our group’s future.”

wwd.com

 

[tatouejeremie]

Italy's Prada posts slight increase in first half sales


1 August 2019
Revenue at Italian fashion group Prada rose 2% in the first half of the year, in line with market expectations, as improving full-price sales and a solid growth in its wholesale channel offset the impact of a move to cut back on markdowns.

The Milan-based company said this year it would stop offering end-of-season promotions in its stores and be more selective with wholesalers to support full-price sales to lift margins and protect its brands.

Prada sales had risen in 2018 for the first time in four years helped by a new strategy aimed at rejuvenating the brand which focused on renovating shops, new products and digital sales.

In the first half of 2019, revenue totalled 1.57 billion euros (£1.43 billion), which was flat when stripping out the impact of currency swings.

The retail network declined 3% affected by the phase-out of markdown sales, while the wholesale channel rose 14% driven by online sales, with the rationalisation not having any impact yet on that part of the business.

Prada warned however it will affect results in the short-term.

Operating profit, or earnings before interest and taxes (EBIT), decreased 13% to 150 million euros, equivalent to 9.6% of sales. The group’s operating profit margin has been declining every year since 2012 when it stood at 27%.

Analysts had expected revenues of 1.57 billion euros and an operating profit of 152 million euros, according to Refinitiv data.

Prada shares closed down 0.8% in Hong Kong before the results’ publication.

not super good news it seems

 

[RaisinBoy]

I went to two Prada stores in two different countries in the last month and it was such a sad experience. Since they don't have the markdowns anymore, there are piles of old products everywhere. I don't think it helps your business when your stores become your graveyard.

 

[amak]

Well karma is a beach and a half. Jil Sander must be doing her happy dance right about now.

 

[Deleted member 7575]

Though it seems like their new strategy is working, kind of, I suspect it will turn out to be no more than a band aid on a much bigger wound.

Prada's big problem is not their digital retailing, or the design of their stores, or the amount of product SKUs... it's the brand and design of the products themselves. Simply put: they are out of touch. Fashion changed, the mood and energy shifted and in this new climate, if you are not a leader, you are nothing (not unless you cater towards a more trend-averse and niche customer, but that's not where the money they need to make to maintain their size and please their stockholders is made).

Streetwear emerged as the new look along with this ironical, post-digital 90's Normcore nostalgia. They did and not and could not adapt to it authentically. Fashion consumers literally and figuratively didn't buy it. Truth be told, I don't think either Miuccia or anyone in her legion of designers understood it. When they tried to the results were miserable. Awkward at best. And they've been left out of the conversation.

But know what the great thing about fashion is? It is always changing. And that whole '90s streetwear trend arc is beginning its descent. The winds of a change come a new and with it a whiff of opportunity. The world is changing faster than ever, if they can remember who they are, and what their brand means, and if they can authentically navigate what I believe will be a new era of sobriety and discretion (rustled here and there by radical technical and formal innovations) then they can come out on top. It's all up to Miuccia and Patrizio.

 

[Benn98]

Critics Love Prada. Shoppers Haven’t. What Now?

One of the most influential luxury brands of modern times has not sold well in recent years. But there are signs of a comeback.

By Elizabeth Paton
Sept. 18, 2019

Like moths to a flame, 800 of the most powerful people in fashion are expected swarm to a former gin distillery on the southern fringes of Milan on Wednesday afternoon. They will bat their wings at the doors of the Fondazione Prada, the contemporary arts complex masterminded by Miuccia Prada and the regular runway venue for the brand powerhouse that bears her last name.

The likely reception for her spring 2020 collection? Rapturous applause.

One of the most anticipated events on the fashion week calendar, the Prada show has been hailed among the top 10 of the season by American Vogue for as long as the magazine has run such rankings. In 2013, the British critic Alexander Fury said Mrs. Prada’s ugly chic frocks “have influenced the way entire generations of designers create clothing.” For years, the entire front row would tote matching Prada bags, seeded among them by the brand, underscoring Mrs. Prada’s status as one of the most powerful and admired women in the fashion business.

And yet, in late 2013, after almost three decades of commercial growth and despite glowing reviews about “glamour that got under your skin” (The New York Times) and “resounding repudiations of milquetoast fashion” (Financial Times), financial cracks began to show.

annual profit fell 28 percent to 451 million euros ($498 million today), after a slowdown in China and heavy brand investment. The next year it was down an additional 27 percent; another 16 percent in 2016 and another 7 percent in 2017.

posted its first annual increase in revenue in five years. That led to the Hong Kong-listed Prada losing $864 million in market value on a single day in March after investors were rattled by slowing Chinese demand.

What exactly has been going on? Is Prada destined to become a brand where business woes eventually all but eclipse a powerful creative ability to foretell the Next Big Thing in fashion?

After all, in 2017 Mrs. Prada herself announced: “I don’t want to be judged by sales. My life is so much more important than sales. We’re not really a commercially driven company.”

Nevertheless, Prada has been trying to reverse its slide almost since the downturn began — and recently there have been signs of a comeback.

Marchesi pastry business.

Matchesfashion.com said Prada was consistently in its top 10 brands when stocking women’s wear and men’s wear, with customers’ appetites growing in recent seasons.

According to its fashion buying director Natalie Kingham: “Prada has always been very covetable. Now there are a new generation of fans in addition to the longstanding fans of Mrs. Prada and the brand.”

The e-commerce aggregator Lyst said that online searches for Prada had increased by 156 percent this year. And the luxury consignment company the RealReal said Prada was the fourth most-searched brand on its platform. Still, the jury is still out on whether the turnaround can work.

“I believe Prada is doing a lot to improve and at one point, the results may come. But growth continues to be a challenge,” said Luca Solca, a luxury analyst at Sanford C. Bernstein. “It is a beautiful brand run in a rather idiosyncratic way, though that was the case even things were booming.”

Mr. Solca added that the share price had continued to “yo-yo up and down — but mostly down,” as investors dithered on whether they believed the turnaround was gaining traction, especially given that a weakened renminbi and social unrest in Hong Kong led to jittery demand from China, where Prada was still improving its retail operations and product assortment.

“Of course investors want to believe in Prada — it is one of the most iconic names in the business,” said Mario Ortelli, managing partner of the luxury consultancy Ortelli & Co. “But in the short term they can be nervous when its performance is so volatile and offset by the booming success of rivals like Gucci and Louis Vuitton.”

In a world where luxury brands have been corporatized and structured, Prada has long had some unusual business practices.

The senior Mr. Bertelli met his wife in the late 1970s when she was determined to take her family business’s products into the modern age, and Mrs. Prada has always said it was he who pushed the group’s ambitions forward. In the 1990s, as it entered new markets and product lines, Mr. Bertelli exasperated rivals by making inexplicable business decisions that somehow worked out.

New Yorker profile noted in 2004. Despite growing scrutiny recently around the company performance, Mr. Bertelli has continued to make heavy investments in areas like manufacturing (a new 90,000-square-meter, or almost 970,000-square-foot, factory in Tuscany opened in 2015) and in Prada suppliers to secure control of the group’s supply chain. When asked why the company had stumbled, however, he kept his thoughts close to his chest.

“I would not say we made oversights. Rather there was an underestimation of the speed at which the market was asking us to make some changes,” the senior Mr. Bertelli wrote last week in an email, acknowledging the company’s foot-dragging when it came to the digital space. “For instance — digital transformation. Once we became aware of the need to promptly react, we stepped up our pace, rapidly caught up and bridged the gap.”

Sales today, he continued, were up across all geographies — with the exception of Hong Kong — reflecting a renewed focus on product and merchandising.

Looking back to past hits appears to have been key to Prada reclaiming relevance. Alongside new wins like the $2,500 sellout Sidonie shoulder bag, several Prada signatures like Hitchcock-style knee-grazing skirts, chunky shoes and jersey T-shirt dresses with a contemporary twist have returned to the catwalk.

sports and streetwear (and the related and increasingly important millennial consumer).

The company’s digital shake-up is being spearheaded by Lorenzo Bertelli, who joined the family business 18 months ago, and was also behind the initiative to replace the nylon in its supply chain with a sustainable version by 2021.

The younger Mr. Bertelli conceded in a telephone interview that Prada had not been quick enough to see how the internet would upend the industry. But he said he was optimistic about the company’s future, and he stressed that much of the hard work had already been done. His biggest challenge, he said, had been in getting to know the company culture.

“It took months and months,” he said. “We had to show some employees how to use smartphones. We had to train people on how data could be used to improve our business. But they love Prada and want it to thrive and now have an understanding of what we have to do. I am young and I am positive: if I wasn’t, I wouldn’t be able to do this job.”

Then there are the complexities of working with parents.

“Sometimes it can be a bit strange or harder, but generally it has been wonderful and it makes me happy to be doing it,” he said.

As for his mother, in the days before her spring 2020 ready-to-wear show in Milan, Mrs. Prada — a woman who made her fortune on looking forward and challenging the norms of fashion — sounded sanguine.

“What could be new? What is not obvious? That has always been an obsession, since I was young. You progress and learn more by going against what you know, which is why when I do a show I don’t take the idea of failure into consideration,” she said, citing women and their differences, both internal and among one another, as another core inspiration.

“Of course, I am interested in why people buy things, but I can only listen so much to the consumer because we have so many different types who like our company so you cannot listen to everyone,” she said.

“People always say: ‘Why did you want to become big?’ I never wanted to become big. I want to be in touch and curious about people, politics, cultures, countries. If I do that, then I think I am doing my job right.”

NY Times