Prada Spa Ord

Good afternoon, everyone, and thank you for joining the Prada Group's first quarter 2025 revenue update. I'm delighted to be with you again, and with me today is our Group CEO, Andrea Guerra. We will start with some remarks and then move to Q&A. Before we start, please be reminded that during today's call, we may discuss forward-looking statements which are subject to risks, uncertainties, and factors beyond our control, and the actual outcome and returns may differ materially from such statements. Please refer to the disclaimers included on slide 2 of our presentation. With that, I will hand over to Andrea Guerra.

Thank you, Andrea. Good morning. We had a positive and solid first four months of the year with a low teen double digit growth. Has not been easy. The sector is now going flat or backwards since 18 months and there is no real improvement signals in front of us. We were able to show a plus 13 in retail growth with the Prada brand competing against a very strong quarter in 2024 of almost double digit growth on 2023. We will continue to build Prada desirability and product innovation to remain in a positive territory even in these tough circumstances. Miu Miu continued on its path with a strong growth in the quarter. Prada brand continues on its journey. on its journey of cultural innovation, and after a very long temporary gastronomic offer in Harrods, opened two very unique locations in 2025. The main being Mishang in Rongzhai, Shanghai, a kind of melting pot of architecture and gastronomic offer between Milan and Shanghai. Mishang is the translation of obsession. Location is conceived together with director Wong Kar-wai. It's a cultural landmark. So Rongzhai in Shanghai has become the brand epicenter in China. with a section dedicated to our Frondazione Prada, a section dedicated to the ultimate experience of our clients, and a section in the garden dedicated to Michang gastronomic experience. I think that this is a big step forward and allows everybody to touch our intentions, our objective, our ambition to constantly carve society culture with our actions. Miu Miu in this first four months of the year was well received at 360 degrees in all countries, all products, categories, and consumer segments. In this last four months, we launched Miu Miu Custom Studio. at first was part of the gymnasium pop-up but then as a standalone project in which we together with the Miu Miu community can interact on many different products to end up with each of one of our clients and consumers with their Miu Miu unique product. This is another step forward in Miu Miu to be part of a larger and stronger community. People are reacting very positively to this project and we are very happy about it. Andrea, it is now your turn to focus on revenue details.

Thank you. And starting with net revenues by channel, the group recorded net revenues of euro 1.34 billion in the first quarter of the year, up 13% at constant effects on the same period last year. Over the period, exchange rates had a mild positive impact of 50 basis points on revenues. We recorded a solid performance at retail level, with sales reaching EUR 1.22 billion, up 13% at constant effects and driven by like-for-like and full-price sales. Wholesale was up 7% versus the same period last year. On royalties, the business delivered plus 13% in Q1, a sustained performance supported by both eyewear and fragrances. Retail sales by brand. Prada delivered a highly resilient performance with retail sales stable over the period against high comps. And indeed, you remember that the first quarter was the best for Prada in 2024 in terms of year-on-year growth performance, followed by the second quarter, and then the comps eased slightly in the second half. Miu Miu confirmed its remarkable growth trajectory with 60% at constant FX. Growth was widespread across all categories and regions. As a result, the brand contribution to group retail sales increased to 31% versus 22% in fiscal year 24. Moving to slide 9, retail sales by geography. Over the quarter, the group achieved robust growth across all regions. Asia-Pacific delivered a good performance with sales up 10% at constant effects on a tough comparison base and broadly unchanged market conditions in the region. Europe was up 14% year-on-year, driven by domestic and tourist spending. The Americas, up 10%, continued to be supported by local demand, notwithstanding increased volatility since the start of the year. Japan remained on a positive trajectory, up 18% over the period, albeit in further moderation, which is expected to continue as we saw extraordinary growth over the first half of 2024, driven by local consumption but also very, very significant touristic flows. Lastly, Middle East delivered the best performance of the quarter with retail sales up 26%. And with that, I will hand back to Andrea Guerra for some closing remarks.

Thank you, Andrea. So normally the first three, four months of the year are the most delicate ones from a team psychological point of view. And I'm happy to have reported the numbers that we have been reporting. And we finished up with a positive result. But the market is not easy. We see irregular trends. So it's not even easy to understand and give an intelligent answer to current trading status. I would say very regular and much of the same, with obviously some differences. For sure, last year, second quarter, Japan experienced a huge inflow of tourists. The group accounted for something around 60% growth, 65% growth on the year before. Therefore, it's a complicated comparison. But on the other side, Prada has constantly invested in North America, last step being the unveil of the dedicated men's store on Fifth Avenue, and we are proving and allowing positive results. So I think this is a very peculiar year, a very complicated year. We need to find our own ways, and we are finding our own ways. And we will continue to fight. We will continue to remain in a positive environment for both brands. But for sure, this last... Almost 24 months has not been easy. And recently, I would say that maybe we have reached the lowest plateau. We will see. And we continue nurturing creativity, nurturing desirability, motivating our people on all companies, both brands and corporate, to keep on with this positive double-digit growth. With this, I thank you all for listening and me and Andrea are ready for answering to some of your questions. Thank you.

Thank you. As a reminder to ask a question, please press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. Once again, please press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. Please be aware that we'll take and answer one question at a time before moving to the next question. Thank you. We are now going to proceed with our first question. The questions come from the line of Susie Tibaldi from UBS. Please ask your question.

Hi. Hello, everyone. So my first question is about the trends that you're seeing by nationality. If you can comment for the Prada brand, it's always very helpful to understand the progression versus the fourth quarter. Thank you.

Hi, Susie. Andrea Bonini. Thank you. On Prada, starting with the Chinese cluster, continue to be a bit volatile. We went from negative to positive in Q4 and Q1 was back to negative against a Q1 24 that was double digit positive, though. This lowdown mostly driven by local transactions, traveler transactions still positive in the period. Europeans, flattish versus mid-single digit in Q4. The North Americans, positive mid-single digit with no major differences versus Q4. However, we would think the impact of weaker dollar and recent uncertainty may be more visible going forward. And on Japanese, positive low single digit in progressive moderation, but as we expected versus Q4.

Thank you. That's helpful. And on the second question, just to maybe expand a little bit, especially on the American consumer and the U.S. market as a whole, obviously very volatile, a lot going on there. Have you seen any change in consumer behavior at all in the most recent weeks? And maybe as a broader question on the current trading, you mentioned it's hard to say, but as the comparison base for Prada gets easier, should we expect some acceleration in the coming quarters?

So I try to be as clear as possible. We were positive in the United States with Prada, and I feel that we can continue to be. It's unstable. I mean, when it's unstable, it's unstable. Every week is a different story. Every day it's a different story. And changes in the regions, changes in the states of U.S., We have invested, as we all know. We have invested on a team. We have invested on Fifth Avenue. We have, and this is readable, refurbished, closed some stores, opened some other stores. So I think that we have been opening a kind of new era for Prada in the U.S., and this is what we're trying to do. It's not easy to comment today, to be honest, not easy at all. On the next comps, I think the second queue is still complicated for Prada. I talked about Japan and that is a huge hurdle. Obviously, second half is much easier.

Thank you.

Next question, please.

We are now going to proceed with our next question. The questions come from the line of Ed Oben from Morgan Stanley. Please ask your question.

Yeah, good afternoon. Andrea, I guess Guerra, you mentioned in your prepared remarks, if I understood correctly, that leather goods was one of the, if not the fastest category. Are you talking Prada and Miu Miu? Apologies if I missed it, so if you could confirm that. And then in terms of what are the drivers for that, are they driven more by your iconic buys or by newness? So that would be my first question. Thank you.

So we had, what Andrea was talking about probably was regarding Miu Miu. So in Miu Miu, leather goods was the strongest category. And even in Prada, on the leather category, we really had great success during these first three months.

And sorry, is it again more iconic bags or newness? And if you could come back on the drivers, that would be helpful.

I think that regarding Miu Miu, it's very complicated to talk about icons today when we talk about Miu Miu. I think that there are some spectacularly successful lines which I hope will become icons in time. So we are nurturing them, we are cultivating them, we're working on them. And it's the wonder, it's the arcade, it's the bow, it's the aventure. So we are doing our best in that. I think that we are recapturing our fair market share in leather goods with Miu Miu. This is what we are doing so far.

Okay. Thank you. And just my second question on your store expansion. I think you had said earlier this year that you intended to the net increase for Prada brand was 10 to 15. And I think For Miu Miu, you had talked about 15 to 20, just wondering if we could get an update on that. And specifically related to that on Miu Miu, obviously you're very underpenetrated in the U.S. So if you could comment on what your internal and external surveys are telling you about the brand perception, how big it could be and so on in the U.S. market and in terms of store expansion. Thank you.

So the project is going on as we have already talked about, no changes. Regarding MU-MU-US, nothing special during 2025. in terms of store expansion. We have just refurbished and reopened with great success our Soho store in New York for Miu Miu. And we are working in order to expand Miu Miu in 2026, 27, 28 in North America. So we are heavily working on that and the perception and the

request is very high and we see it online every day okay fantastic thank you thank you next question please we are now going to proceed with our next question and the questions come from the line of one rumble from hsbc please answer the question

Hi, good afternoon, gentlemen, and congratulations on a great quarter. I was wondering if you could comment on how you think about pricing. Regardless of tariffs, you've had the dollar, the renminbi, a few other currencies being relatively weak. What are you ready to put through this year to possibly compensate for a very strong euro? And then I'll have a follow up, please.

So we are observing exactly what you are observing. We talked about in the past our kind of maintenance pricing strategy of between 2 to 4 points every six months. And we have not yet decided what to do in June, July. So we are seeing exactly what you're seeing. So including tariffs, because we will need at that time by June, we will understand also what happens with tariffs. We will have to do certain things on pricing for sure. But I do not know exactly the amount today.

Okay, great. And then my second question is more philosophical. I think when Miu Miu started its journey of massive outperformance relative to peers, you had commented at the time that Miu Miu had a lot to learn from the Prada brand. Now that Miu Miu is half the size, at least this quarter, of the Prada brand, is it fair to say that the Prada brand might be able to learn a few things from Miu Miu? How do you think about that? Not hard cost synergies or anything, but more philosophical best practices or synergies that the Prada brand can learn from this new, new success.

You know, being a philosophical question, all answers are viable. I would say that Miu Miu still is learning a lot from Prada and there are so many things we can do with Miu Miu because Prada is there. So the responsibilities of Prada are much higher and bigger and sometimes you can feel those. but I wouldn't revert any kind of thinking or opinions between the two brands today. Okay. Thank you. Thank you so much.

Best of luck.

Thanks. Next question, please.

We are now going to proceed with our next question. The questions come from the line of Thomas Chauvet from Citi. Please ask your question.

um good afternoon andrea and andrea um i have two questions the the first one going back to um pricing and and perhaps related to to potential tariffs of of 10 or 20 percent applied to to the u or maybe nothing i'm sure you've had a a bit of a sensitivity analysis of how much would you need to increase prices in the U.S. to fully offset 10% or 20% tariffs? I mean, you have a very high gross margin, I guess, pretty low lended costs in the U.S. So is that a manageable price increase, you think? And what is the share of Asian sourcing today in your total COGS? I presume it's now marginal. That's my first question.

Extremely, extremely low on this second half of the first question and the first half of the first question with the 10% reciprocal tariffs. the maintenance type of increases of which Andrea spoke earlier about would be enough to compensate. But the point is the impact that matters the most, and it's harder to quantify, is the one on consumer confidence and long-term on the U.S. economy. Yeah. Next question.

Thank you. And my second question on the discussion of Prada versus Miu Miu, when you think about the customer demographics, particularly in leather goods, how much today you think there is overlap between the two brands? How are you leveraging that in making sure that you're historical Prada handbags customer doesn't fly to Miu Miu because certain bags are maybe more hot at the moment or better priced. Are you creating some form of synergies between the two brands to leverage customers? Following up to Erwan's question earlier on Miu Miu learning from Prada and maybe Prada learning from Miu Miu. Thank you.

So what we're doing is we're forbidding our Prada customers to buy Miu Miu. It's a joke, obviously. I mean, we are managing the two brands totally independently. We're managing the two brands in their DNA. Between all brands in the universe, there is some overlaps. Obviously, Miu Miu growing has gained market share on everyone. in the market, some brands more, some brands less, and I would say that Prada has been one of the less. Having said so, consumers are free to do whatever they want. We are constantly nurturing brand by brand, and inside the brand, their consumer segments by their consumer segments, and we are not doing any thoughts on cross-branding, on overlapping or nothing like that. It will never be the case. Thank you, Andrea. Thank you. Next question, please.

We are now going to proceed with our next question. And the questions come from Lallana Melania Grippo from BNP Paribas. Please ask a question.

Good morning and good afternoon, everyone. This is Melanie Agrippo from BNP Paribas. I've got a question on profitability. How should we think about first half versus second half? And are there any seasonality facing we should bear in mind? Also, in light of the store opening plan, how could it impact profitability?

Hi, Melania Andrea Bonini. It's a revenue call, so I will not comment extensively on margins. What I would say is nothing to highlight compared to what we said before. So, first of all, growth remains the priority, but ideally we would like to maintain the trajectory of progressive, even if moderate, margin expansion on a yearly basis. And in terms of phasing, I wouldn't necessarily highlight anything dramatically different from last year.

Thank you. I have a follow-up online. Is there anything you can share with us about the performance of your online channel for both brands?

I would take nothing specific, I would say. United States, North America has grown a little bit in terms of mix for both brands, but I would say no major differences from the trend. So always remaining in that between 8% and 10% of the total revenue.

Thank you.

Next question, please.

We are now going to proceed with our next question. The questions come from the line of Chris Gao from CLSA. Please ask your question.

Hi, good day, Benjamin. Thanks for taking my question, Chris Gao from CLSA. So my first question is regarding the competitive landscape. So with a couple of mega luxury peers announcing new creative characters, and also likely accompanied with rising investment to promote newness. So how do Prada and Miu Miu, which have led to newness in the past cycle, prepare to react to the competition in the possible new cycle from peers? So this is my first question.

Maybe I did not understand the question fully. I think that the industry overall is in a reshuffle mood and I think that this reshuffle mood is not close to be finished. I think it will take another 12 months probably to see something different and I really think that this is a period where we can are totally and with great performance, we mark a share because we have stability on one side, but we are full of creativity on the other side. So I think that stability nowadays is a very positive signal, if I had understood the question.

Okay, thank you. So the second question is regarding your plans or investments in China and also your outlook in terms of local demand. So right now we're still seeing important store openings in China. For example, the Miu Miu flagship store is newly opening in Wuhan. We really like the store. It's very, very beautiful. So with China, local demand right now as you came in the first quarter, maybe you're still seeing some difficulties, still remaining as a temporary dragger. But still, you are doing very meaningful and important investments in China. So would you expect some, you know, incremental pickup when it comes lower heading to the second half of this year? And if yes, maybe how much is from like the incremental space, how much is from the same store sales pickup? And from the same-store sales pickup, so which consumer group in your mind would be the more meaningful driver, still the high-net-worth group would be more meaningful, or you might see or expect some improvement likely from the aspirational customers, maybe related stimulus or the continued policy help to boost domestic consumption. Thank you.

Thank you. So thank you for the Wuhan Miu Miu store. It's the largest store in China so far and had an unbelievably strong first week, but it's only the first week. So obviously we keep remaining very positive about the long-term future of the region. The only reason why second half will be better is because comps are easier. So I'm not expecting any specific change. I hope that some of these extended policies, governmental policies, at one stage will modify a little bit the consumer mood and allow people to spend a little bit more money and save less. But I don't see today any kind of change. And let's see.

Okay, thank you. This is very helpful.

Thank you. Next question, please.

Thank you. As a final reminder to ask a question, please press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. We are now going to proceed with our next question. The questions come from from Intesa San Paolo. Please ask your question.

Thank you for taking my questions. The first one concerns Chinese offshore purchasing. Can you quantify the offshore-onshore purchasing needs in the first quarter?

It's not dissimilar from what we said before. So it's still around 70-30%.

Let me add something, Andrea. I would only add that Chinese have become invisible in Europe. I mean, we had seen a good start January, February, March 2024, but since then we have really not seen Chinese expanding and growing in Europe anymore.

Understood. Thank you. And my second question regards the growth profile in the first quarter in particular. What was the contribution of price mix on the retail organic growth?

Price mix. I mean, it was a group level. We had a fairly balanced contribution from volume and price.

Okay. Thank you very much.

Thank you. I think there's one last question, probably. Go ahead, please.

We are now going to proceed with our last question. And the questions come from the line of Paola Carboni from Equitasim. Please ask your question.

Yes, hi. Good afternoon. Thank you for taking my question. Very simple one. Can you give us some color on the evolution of the quarter in the sense of just to understand whether the trend was, okay, quite volatile as far as I got it, but basically was March any different from, and then April also as well, if you can comment from January and February, have you seen a progressive deterioration, or I don't know if you can comment on the exit speed, let's say, more specifically. And secondly, in terms of pricing action for the U.S. market and for the tariffs, situation. In case, would you consider any different approach to the U.S. market compared to the worldwide action on prices? Or would you aim to maintain, let's say, some geopolitical pricing structure, the same you have now? Just to understand whether you would consider to raise prices more in the U.S. or to spread the impact on a worldwide basis. Thanks.

Thank you. Thank you. I think everything we could have said on both of these questions, I think we said I will try to repeat. No real changes. This is also the reason why I talked about the first four months. Obviously, we are entering in a comparison with a Japanese hike which has been unique. And we talked about it a year ago. So I would say that that is the only difference. I mean, company-wise, last year we did plus 60-something in the second queue. So it's obviously something that is not repeatable. And we're still having a great performance in Japan in relative terms, especially on locals. This is how I would finish it up. And on pricing, I think it's exactly what I said before. So I would not repeat it again. Thank you. Thank you. So if I understand correctly, thank you, everyone, and hope to see you soon. Buongiorno a tutti. Arrivederci.