Prada Sales Slow Despite Strong Miu Miu Label Performance

A Miu Miu store, operated by Prada SpA, at night in Seoul, South Korea, on Saturday, Aug. 19, 2023.

(Bloomberg) -- Prada SpA's sales slowed as the Italian fashion company experiences a cutback in luxury demand that other competitors are also facing. Its hip Miu Miu brand is proving resilient, though.

Net revenue in the third quarter came in at €1.11 billion ($1.18 billion), the company said Tuesday, missing analysts' estimates. The Prada label, which accounts for more than 80% of sales, saw its growth slow to 5% in the quarter, down from 15% in the previous one. Miu Miu meanwhile, while much smaller in size, continued to outperform with 48% revenue growth.

Shares of Hong Kong-listed Prada SpA fell 5.4% on Wednesday morning.

The results for Prada come amid a global slowdown in demand for luxury goods. The trend has highlighted the resiliency of some brands, such as Hermes International, compared with peers like Gucci owner Kering SA, which have suffered more.

Luxury behemoth LVMH Moet Hennessy Louis Vuitton SE also disappointed investors when it posted sales growth that came up short of estimates at its crucial fashion and leather goods unit on Oct. 10.

The conflict in the Middle East and its wider global repercussions have had an impact on business, Prada Chief Executive Officer Andrea Guerra told analysts on the call.

“In some cities of the world in the past weeks you have seen a little bit more tension driven by macro geopolitical” events, he said, without specifying locations. The group remains “very vigilant” on recent developments and concomitant macroeconomic uncertainties, Chief Financial Officer Andrea Bonini said.

Overall, Guerra said he was “happy” with the performance in October even though the month tends to be much less important sales-wise than the November and December year-end shopping season, he added.

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Miu Miu in the third quarter reached the top of the Lyst Index, which tracks both the most searched-for brands and products on its own shopping app, as well as social media mentions. The Prada brand came in third, down from the second spot in the previous quarter.

Ballet flats selling for more than €700 and cardigans costing €1,250 have been some of the more sought-after Miu Miu products, according to Lyst.

Miuccia Prada, the granddaughter of the group's founder, is creative director at Miu Miu and she splits creative direction duties at Prada with Raf Simons.

(Updates with more CEO comments in 8th paragraph; adds shares in 3rd)

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