Prada’s Business Recovers from Pandemic, Company Shows Profitable Numbers

By Adriaan Brits Wednesday, January 6, 2021

Prada said it returned to profitability at the end of 2020 despite taking a heavy blow from the coronavirus pandemic, thanks to a remarkable recovery in the second half of the year.

Sales Growth Recorded in H2

The luxury fashion house published the unscheduled business update ahead of its full-year results, which it intends to release in March due to coronavirus-induced uncertainty. In the first half of 2020, the pandemic sent Prada’s revenues tumbling by 40%, resulting in a €196 million operating loss ($240.5 million).

However, in the second half of the year, “despite being impacted by ongoing store closures averaging 9% of the network, [the company] saw a progressive recovery in sales, culminating for the retail sales in a full recovery to 2019 levels in the month of December,” Prada said.

After the first half of 2020, which brought a nearly $633 million loss at Prada, sales in the Italian fashion company recovered fully to 2019 levels.

The company’s biggest recovery was seen in the Asia-Pacific region, particularly China, which registered a 52% rebound in sales in the second half of 2020. During that period, sales in Europe and Japan continued to struggle due to heavy travel restrictions, while the Americas and the Middle East recovered at a much quicker pace.

Apart from sales, Prada has reportedly reinforced its financial position through positive margins, reduced inventory, and thanks to stricter management of stocks, raw materials, and end products.

“I am very satisfied with how we have faced the serious difficulties of the year just ended and how, despite the persistent uncertainty which will likely continue for the next months, we have managed to deliver positive results,” Patrizio Bertelli, Prada’s chief executive, said.

“Thanks to the generous commitment of all group staff, we were able to respond rapidly and consistently to market changes, which has been appreciated by all of our customers.”

Despite a positive trading update, shares of Prada — which trade in Hong Kong under the symbol number of “1913” — fell 2.7% to push total weekly losses to over 6%. This should be seen in the context of profit-taking from investors as Prada stock recorded huge success in November and December when it gained over 60% to trade at the highest levels recorded since 2015.

Summary

Prada closed 2020 with an operating profit as the luxury fashion company saw a full recovery in the second half of the year after losing more than half a billion euros in H1.

About the Author


Headshot for author Adriaan Brits
As an analyst of global affairs, Adriaan has an MSC from Oxford, with diverse interests in the digital economy, entertainment, and business. He is a specialist trainer in Advanced Analytics & Media.

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