Executives and analysts say the U.S. is a weakness for luxury goods, with sales slipping after a post-lockdown euphoria. Prada Group's US sales fell by 1% over the nine-month period.
While some consumers may be more cautious with their spending, Mr Guerra believes the group can “increase prices more broadly” rather than lower them. “Obviously it's going to depend on whether we can make our brand even more appealing, make our stores even more comfortable, and train our employees even more. I think that's the real opportunity we have.”
Prada's results support “solid progress,” with growth slightly above expectations, according to a note from Jefferies equity analyst James Gruzinich. “Very strong brand enthusiasm in China (particularly Miu Miu) is a key differentiator for Prada, which could reduce earnings risk compared to peers.”
The third quarter saw the launch of Prada's makeup and skincare lines. Guerra said there are no plans to license categories outside of beauty and eyewear. “Eyewear remains super business. Relationship with Luxottica [which holds the group’s eyewear licences] It's pretty good. ” When it comes to beauty, he says the brand is “at the beginning” of its “startup phase.” “Hopefully in the next two to three years we'll see a lot of growth and a bit more normalcy. Prada isn't concrete yet, but the plans with L'Oréal are great and very clear. We plan to open stores around the world in major department stores and travel retailers.”
Luca Solca, senior luxury goods analyst at consulting firm Bernstein, writes that Prada is one of the best-performing luxury goods companies when it comes to year-to-date sales growth. . He added that Prada's rise is likely to be “uneasy” as “the market is nervous about the uncertainty of the Prada industry's full year 2024 and reacts very negatively to even the smallest negative surprise.” There are doubts as to whether this will be enough to support stock prices.
“This quarter was our toughest quarter by comparison, but I think we accomplished a little more of what we set out to accomplish,” Guerra said. However, the group is bracing for ongoing macro-environmental challenges. “Our toughest days are behind us.” [but] “At some point, we will once again enter a period of intense tension,” he said.
The important thing is to “keep moving forward and keep investing,” Guerra said. He explained: We need to be more focused and precise in all our activities. Prada and Miu Miu are both “committed to improving the quality of their people” through “training, motivation, routines, KPIs, things that make customers happy,” Guerra said.
He stressed the need to “remain humble” and “not be complacent.” “While we are all currently moving towards the all-important holiday season, which has already begun as we speak, we continue to outperform the industry average. We are now starting to plan for 2024 and look forward to another strong year in 2023.”
Have any comments, questions, or feedback? Email us at Facebook@voguebusiness.com.
Learn more about this topic:
Prada designs spacesuits for NASA. Will high-end customers wear it next?
Luxury beauty battle intensifies as new entrant Prada
Miu Miu boosts Prada Group's sales by 20%