On July 29, the Italy-based and Hong Kong-listed fashion group Prada SpA reported that its net revenues fell by 40 percent year-on-year to $1.1 billion (938 million euros) over the first six months of the year. Like many other rivals, the group’s revenue registered heavy losses due to lockdowns during the COVID-19 pandemic.
But retail sales in China, which were significantly impacted by closures beginning in February, improved when regional markets resumed in March and April. China has recorded high double-digit sales growth since April, reaching 60 percent in June and 66 percent during July, despite struggles in Hong Kong and Macau due to continued disruptions in travel retail. Following the group’s decision last year to take strict control of all distribution channels (as a way to retain its exemplary brand equity), wholesale channels shrunk, and e-commerce delivered triple-digit sales growth both during and after the lockdowns.
The digital channels that Prada continued investing in also paid off in the Chinese market. Head of group marketing & communications, Lorenzo Bertelli, highlighted in the earnings call how Prada gained more than 1 billion views on Weibo, thanks to its well-selected Chinese talent and the way it leveraged its user-generated content initiative.
While Prada claimed it has still been difficult to forecast a second-half scenario, the luxury fashion house could break even by the end of the year if new virus outbreaks are avoided and recent sales trends continue. Now that Raf Simons has been appointed as co-creative director alongside Miuccia Prada, the group is hoping to tap into a larger demographic, which should help restore profitability as soon as the pandemic has stabilized.