Prada Group reported a 9% increase in first-half sales at constant exchange rates on Wednesday, defying the luxury sector’s slowdown thanks to the strong performance of its smaller but fast-growing brand Miu Miu, even as its core Prada label declined.

Net sales for the Italian, family-owned group—which is set to include the Versace label, acquired in April pending regulatory approval—amounted to €2.74 billion. The result was in line with the consensus forecast by Visible Alpha analysts, with growth supported across all regions.

Retail accounted for 90% of the group’s sales, compared to 8% from wholesale and 2% from licenses, primarily perfumes and eyewear. Prada sales reached €1.647 billion, while Miu Miu posted €780 million.

Geographically, the group saw a slowdown in tourist spending but offset it with solid local demand. Sales in the Asia-Pacific region rose 10% to €838 million in the first half. In Europe, despite a softer second quarter, sales grew 9% to €728 million. The Americas posted a 12% rise to €424 million, while Japan increased 4% to €326 million. The Middle East recorded the strongest gain, with retail sales up 26% to €137 million.

Retail sales for the Prada brand fell 2% during the period, while Miu Miu surged by 49%, representing nearly one-quarter of the group’s total sales in 2023.

Last month, the group parted ways with Gianfranco D’Attis, general manager of the Prada brand. In a conversation with financial analysts, Andrea Guerra, the group’s CEO who has temporarily taken over the role, said, “If it’s an interim, it will be a long interim.”

Guerra expressed optimism about both Prada and Miu Miu’s positioning, crediting their ready-to-wear strength as a lever to capture future market share. “We’re happy with the last few months. We don’t see any big changes since the beginning of the quarter. We navigated the last period in a new world. We’re working in that world. This means we have to have collections that are adapted to this world, collections that have soul, products that are capable of giving emotions. Wealthy customers are looking for unique, personalized products.

“To achieve this, we need to improve our infrastructure, our systems… We’re not looking for shortcuts, and we’re very attached to full price and efficiency. This means constant vigilance, and every six months we look at how we can become leaner and more agile. This is to remain desirable and unique in this new world.”

According to Guerra, enhancing desirability will require focused work on leather goods across both brands, which still offer growth opportunities. He also noted the importance of expanding Miu Miu’s physical presence in North America. He estimates store spaces there could increase by 10% to 12% between 2026 and 2027, either through expansions or new openings.

The group’s adjusted operating profit rose by 8% to €619 million for the half-year, slightly below the €636 million operating EBIT forecast by Visible Alpha analysts.

“This good performance was achieved in a difficult context, somewhat unprecedented in our sector,” said Prada Chairman Patrizio Bertelli. “We believe that structural growth opportunities remain unchanged, but we are aware that in the short term we may continue to face a turbulent economic environment,” he added.

The group reiterated its expectation that the Versace acquisition, agreed in April, will be finalized in the second half of the year.

However, a broader recovery in the luxury goods industry remains elusive. Kering, owner of Gucci, reported a 15% drop in quarterly sales on Tuesday, while LVMH posted a 4% decline last week—slightly better than expected.

French luxury group Hermès, which recorded a 9% rise in quarterly sales, also showed signs of being affected by the global slowdown.

FashionNetwork.com with Reuters