Miu Miu Revenues Double In First Half, Extending Industry-Beating Run

Prada’s red-hot Miu Miu label continues to buck slowing demand for luxury goods, with retail sales nearly doubling in the first half, the company reported Tuesday.

The brand’s first-half retail sales jumped by 93 percent year-on-year, accelerating slightly from 89 percent growth in the first quarter. Retail sales rose 6 percent for flagship brand Prada, slowing slightly compared to the start of the year.

Overall, growth held steady at Milan-based Prada Group, with first-half net revenues rising 17 percent to €2.55 billion ($2.76 billion).

The Italian group’s performance stands in sharp contrast to the broader luxury sector, where slower economic growth, collapsing consumer confidence and rising geo-political uncertainty have contributed to sales momentum that has fallen sharply from post-pandemic highs.

Brands are also facing accusations of price gouging and declining manufacturing standards, putting pressure on the sector’s value proposition.

LVMH and Richemont both reported sales down by 1 percent, while Gucci-owner Kering’s revenues tumbled 11 percent in the second quarter.

Flagship label Prada continues to see strong momentum in ready-to-wear and footwear, chief executive Andrea Guerra said, while leather goods are improving with help from a major marketing push: the brand tapped actress Emma Watson as the face of its core nylon bags, while Scarlett Johannsen fronts the iconic Galleria range.

At Miu Miu, interest in the brand continues to soar despite the broader market slowdown, as well as a staggering comparison basis: last year’s first-half sales had already spiked 50 percent.

“When you have this kind of incredible growth it’s hard to say what exactly was good, what was less good, what was excellent,” Guerra said.

Sales of the label’s core Arcadie and Wander bags accelerated alongside a strong performance for new handbag styles. “The contribution of leather goods is progressively increasing, which is exactly the direction we wanted to go,” Guerra said.

Miu Miu’s growth beat market expectations by 30 percent, while the Prada brand’s growth came in slightly below analyst’s forecasts. The brand has benefitted from a spate of buzzy runway shows and a re-merchandised offer that has resonated with young luxury customers.

With sales growth continuing to beat the wider market, analysts turned their attention to the group’s profitability, which has long lagged industry peers. Operating margins rose by less than one percentage point to 22.6 percent as increased investments in retail operations, marketing and back-end costs all chipped away at higher sales and profit.

Prada Group’s focus remains on supporting growth, though the sharp increase in spending on advertising and promotions (up 40 percent year-on-year to  €219 million) should be less dramatic in the second half, Guerra said.

Prada is among the luxury brand’s whose steep price increases have come under scrutiny in recent seasons, as less-wealthy fashion fans who used to stretch their budgets to collect the brand feel increasingly priced out of its universe.

On a recent store visit, a knit cotton polo was priced at €1,250, while a medium Galleria bag cost €3,800. €370 sunglasses or a €920 smartphone satchel were among the handful of items still priced beneath €1,000 as the brand increasingly targets a high-end client.

Guerra said the brand’s entry-level offer remained “competitive” despite higher prices. “We’re not observing an issue. Most of our competitors increased their entry prices significantly, too, and we came from a lower entry point,” he said.

After implementing a low-single-digit increase in the first half of the year, global prices are scheduled to rise further in the coming months, Guerra flagged.

Guerra was asked how the brand could continue to lift volumes rapidly, particularly at Miu Miu, while still ensuring good labour conditions in its supply chain: an Italian investigation that has thus far found sweatshop-like conditions at rivals including Armani and Dior.

“This kind of news is never good. It’s a signal to better [lock down] your management, organisation and your  systems,” Guerra said. While Prada does rely on external contractors, it also owns 20 of its own factories. “The industrial component of Prada is pretty strong.”