Business World

Tuesday 22 October 2019

Prada stops end-of-season markdowns to protect brand

Retail

The Italian luxury group aims to boost its revival after achieving revenue growth in 2018 for the first time in four years
The Italian luxury group aims to boost its revival after achieving revenue growth in 2018 for the first time in four years

Claudia Cristoferi

Italian luxury group Prada said it would stop offering end-of-season promotions at its stores, in a bid to boost margins and protect its brand after achieving revenue growth in 2018 for the first time in four years.

The Milan-based group, run by husband and wife team Miuccia Prada and Patrizio Bertelli, aims to cement a sales revival that began at the end of 2017 after a change in the company's strategy. By scrapping end-of-winter and summer discounts it is following rivals like Gucci.

"We decided to stop doing markdowns from 2019 onwards," Bertelli, who is Prada's chief executive, told analysts in a conference call.

"We believe that this decision is actually going to strengthen the brand's image and in particular it's going to guarantee higher margins for us."

Considered an institution in the fashion world, Prada has lost ground to both new and old rivals in an increasingly competitive industry dominated by cash-rich giants such as LVMH and Kering.

Luca Solca, an analyst at Bernstein, welcomed the move to end the seasonal promotions, even though he said it would hit total revenue growth in the short term.

Prada reported full-year sales of €3.142bn on Friday, up 6pc at constant exchange rates and compared with 9.4pc growth in the first six months. At current exchange rates, sales growth came in at 3pc.

The results came out after the market close in Hong Kong, where Prada is listed. The fashion giant's share price has fallen 31pc in the last 12 months.

Reuters

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