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Good day and thank you for standing by. Welcome to the Prada Group first half 2025 results presentation. At this time all participants are in a listen only mode. After the speaker's presentation there will be a question and answer session. To ask a question during the session you will need to slowly press star 1 and 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question please press star 1 and 1 again. Please be aware that we will take and answer one question at a time before moving to the next question. Please note that today's conference is being recorded. I would now like to hand the conference over to Mr. Andrea Bonini, CFO. Please go ahead, sir.

Good afternoon, everyone, and thank you for joining Prada Group's first half 2025 results call. I'm delighted to be with you again. Alongside me today are Mr. Andrea Guerra, Group CEO, and Mr. Lorenzo Bertelli, Group CMO and Head of CSR. Mr. Guerra will start today with highlights for the first half of 2025 and a business update, followed by Mr. Lorenzo Bertelli with an overview of our marketing activities and ESG initiatives. I'll then present our financial performance before Mr. Guerra signs off with some closing remarks. Before we start, please be reminded that during today's call, we may discuss forward-looking statements which are subject to risks and certainties and factors beyond our control that could cause the actual outcome and returns to defer materially from such statements. Please refer to the disclaimers including on slide two of our presentation. With that, I will hand over to Mr. Guerra.

Buongiorno a tutti. We've been very focused during this first six months. We've been working hard. For sure another complicated period for our industry. We as Prada are reporting to you what we feel being a solid and healthy set of numbers. Solid because yet we have been able to foster our relationship with our consumers worldwide and we've been able to register a double-digit growth, mainly almost totally like for like. We have scored a growth of 10% against the period for Prada of very strong comparison and a continuous journey for MiuMiu. We had a significant growth difference for Prada between the two semesters in 2024. We have just finished the toughest comparison. As I stated at the beginning, we have seen probably, and let me repeat, probably the worst. An industry on one side that is resetting after 20 years of almost constant growth, and on top of that, a cyclical downturn basically led by tourism. This should be quite a special period in this year. On one side, the evaluation. On the other side, geopolitical is now turning to the fact that there is less American tourists in Europe, and especially during spring, summer, they are fundamental for the luxury business. And on the other side, we have a complicated comparison with the huge spike of Asian tourism in Japan during spring-summer 2024. As a reminder, last year, Q2, Prada Group in Japan finished with a plus 65%. So it was a solid semester. Why healthy? Because on one side, I think we have been continuing working diligently on efficiencies, on productivity, on being able to increase our numbers per square meter per single people in the store. But on the other side, we constantly continue to invest on our people, on our brands, on our stores, on new collections and products. And at the end of all of this, we have been able to keep up with a strong profitability. So in one sentence, I would say, yes, it is tough, but so far we have been able to follow up on our long term journey. Business wise, looking at Prada specifically, I would give you three bullet points. The brand, the shows, image, foundations, pillars are all loved also in this resetting of the industry. Two, we have invested and working incredibly hard on new products and collections that we have been launching and launching right now. We feel that the product structure of these collections and the price structure of this collection with more stretching between entry price and higher prices, we feel that these collections are very correct in this moment of the industry. Three, we have been elevating our relationship with our consumers, our hospitality day after day. The last example of all of this, is the opening of our men's store on Fifth Avenue, which allows men to enjoy, invest, dress up on a kind of dream lounge where there are more than 250 SKUs ready for Make to measure and make to order. So really going through a journey of uniqueness and personalization. On the other side, Miu Miu. Miu Miu is on a journey. The link, the great deep link between the brand and the Miu Miu consumers is even stronger and deeper compared to six and 12 months ago. We had a very well-balanced growth between products and geographies. Huge investments and results are paying off. As we said, we wanted to balance and rebalance the European region, and that European mission is going on with great results and achievements. And I think that the symbol of all of this has been the reopening of our new Bond Street boutique. a store made of contrasts, post-industrial on ground floor, and a wonderful salotto club on the second floor, where you can enjoy all our unbelievable treats by our wonderful staff. Having said this, I will ask now Lorenzo to take over, talk about our brands in more deep, even giving you some update on our sustainability journey.

Thank you, Andrea, and good afternoon. I would like to begin by highlighting Prada's marketing and communication initiatives during the semester, which enabled the brand to maintain strong relevance. Both menswear and womenswear fashion shows were met very positively, affirming Prada's creative strength. Campaigns such as 10 Protagonists featuring Carey Mulligan, Prada Renilo, and Ayo Summer further enforces the brand's cultural resonance. Signature events including Prada Mode, Prada Frames, The Sound of Prada continue to deepen Prada's distinctive identity on the intersection of fashion, art, and architecture. These creative initiatives enable us to collaborate with renewed and inspiring personalities such as the Astrogate, Kazuyo Sejima, and Forma Fantasma. Lastly, new experiential venues such as Mishan Pradarongzai in Shanghai, a unique all-day cafe and restaurant conceived by renewed Harthouse director Von Carvaj, offered elevated and immersive expression of the brand universe. Moving on to Miu Miu. Miu Miu's distinctive exploration of femininity continued with the impactful Fall-Winter 2025 fashion show, which was met with highly positive reception. The latest Leather Goods and L'été campaign celebrated the brand's aesthetic through the distinguished of celebrated photographers. The first half of the year also marked the second iteration of the new signature cultural format, including Tales and Tellers in New York, Literary Club in Milan, and Summer Reads in cities around the world. The brand collaborated with four-time Academy Award winner director Katherine Martin, whose short movie, Grande Envie, accompanied the unveiling of the new MIMU Upcycle Collection. The brand also fostered the ongoing collaboration with New Balance, partnering with tennis champion Cocoa Golf to explore the boundaries between fashion and sportswear. Finally, Mersini Store Experience, linked to the MIMU Gymnasium and MIMU Custom Studio Collection, provided new ways to elevate the customer journey and expanded the MIMU community. We now turn to ESG, an essential driver of the group's sustainable long-term growth. As part of our environmental strategy, we advanced the transition to lower-impact raw materials and made progress in responsible chemical management through targeted training programs for both supplier and internal operation teams. Significant investments were also made in full end-to-end traceability while assessing upstream impacts on biodiversity. To support our people-centric vision, we implemented a global D&I roadmap, which includes people, culture, forums, and the rollout of a D&I awareness trading program. We reinforced our commitment to women representation in the top and senior management roles and progressed with salary review, aiming to address the gender pay gap. Our dedication to ocean literacy and preservation was further announced through the creation of SeaBeyond multi-partner trust fund for connecting people and ocean, launching in collaboration with UNESCO to mobilize financial resources from a diverse range of partners. Moreover, in April, we inaugurated the SeaBeyond Ocean Literacy Center in Venice, thus offering the dedicated space to promote knowledge and understanding of the ocean. And with this, we'll now hand over to Andrea Bonini for the financial review. Thank you.

Thank you, Lorenzo. Starting with slide 12, we close the period with a solid P&L, with healthy growth and some profitability. The group reported net revenues of Euro 2.74 billion, up 9% versus H1-24 at constant FX. FX had a drag on net revenues of 160 basis points, leading to an increase of 8% at current exchange rates. Retail sales for the period reached €2.45 billion, up 10% versus H124 at constant effects. Habit adjusted reached €619 million in H125, with margin of 22.6%, showing steady profitability versus H124, notwithstanding higher investments to strengthen brand desirability and our retail and business infrastructure over the long term. At the end of June, cash flow from operations reached 696 million, and net cash position stood at 352 million. Moving to the next slide, the retail channel delivered a solid performance in the period with sales up 10% versus H124 constant effects, of which 8% in Q2, driven by like-for-like full price sales. The contribution from additional space remained limited in the semester. Wholesale was down 1% versus H124 and down 7% in the second quarter. The channel was impacted by some degree of phasing, but our strategy remains unchanged as we maintain a selective approach with independence. Royalties were up 10% in the semester, with growth supported by both eyewear and fragrances. Turning to the next slide, retail sales by brand. Prada retail sales were down 2% in the semester, showing good resilience in the challenging context and against ICOMS. As we will see later, the performance in the second quarter was mostly impacted by Japan and Europe due to lower touristic flows. On the other side, Americas and Asia-Pacific did sequentially better. MiuMiu continued on a trajectory to sustainable growth with 49% retail sales growth in the semester and 40% in Q2. Growth was well spread across all categories and regions. The brand now contributes to 32% of the group retail sales versus 23% in H1-24. Group performance also at churches, up 4% in the semester and 6% in Q2. Moving to the next slide. In H1, the group achieved solid growth across all geographies, notwithstanding the headwinds faced in Japan, particularly in Q2. Retail sales in Asia Pacific were up 10% in the semester, with similar trends between the quarters amid broadly unchanged conditions in the region. Europe was up 9%, with Q2 impacted by lower touristic spending on tough multi-year comp basis. Local demand remained fairly stable over the period. Good progression in the Americas, with Q2 improving on both local and traveler spending. As for Japan, the region decelerated against exceptionally high touristic flows in 2024, especially in Q2. And as a reminder, the group registered plus 65% in Q2 24 and plus 48% in Q3 24. Domestic demand, however, proved resilient. And lastly, the Middle East delivered the best performance of the semester, up 26% in H1, with balanced performance across the quarters. Turning to next slides, cross-margin was at 80.1% in the semester, broadly stable year-on-year. OPEX, excluding non-recurring expenses mainly related to the acquisition of Versace, increased by 9% at constant effects, mostly driven by discretionary consumer-facing activities, variable expenses including labor and rent, as well as the DNA impact resulting from the step-up in CAPEX. We've been focused and disciplined on fixed costs, and as a result, the group generated an EBIT adjusted of 619 million, up 8% against H124, corresponding to a margin of 22.6% in line with H124. Finally, net income reached 386 million in line versus the same period of last year. CapEx for the first half of 2025 was 247 million, as we kept investing across all the key strategic areas. There is a phasing element in the comparison with H124, in which we'd spent roughly one-third of the full-year CapEx excluding real estate. And this semester, we're at 40% to 50%. On the retail side, we continue to elevate the network and enhance the in-store experience. and we had some landmark new openings, as you heard from Andrea. On the industrial side, we continue to expand organically and inorganically our infrastructure, investing in new facilities for leather goods and ready-to-wear, and improving and expanding others. And we made steady progress on digital transformation, which takes a good portion of that middle block. Moving to the next slide, Networking capital increased by circa 40 million year-on-year to reach 819 million, with incidents on net sales declining from 16% to 15%. And if we look at inventory specifically, we have reduced our DIO year-on-year by circa 1.5 months. Lastly, the group retains a solid balance sheet, closing the semester with a net cash position of 352 million, thanks to healthy cash flow generation. The one item that I would call out for comparability with H124 is taxes, because in H124, the payment shifted to July due to calendar. With that, I will hand over to Andrea Guerra for his closing remarks.

Thank you, Andrea. Now, we are happy with this first six months, and we have begun the second half. No major changes to be reported. expecting some cyclical negatives to finish up as we said before. We have gone through a period where we have refused to imagine that the industry was resetting. Then we have had a lot of fears and a lot of people that didn't know exactly how to tackle this new world, then we understood today we are simply navigating in this new world. This is the new world. We're ready for this. We're working in this world today. We needed to have collection correct for this new world. Collections that have a soul. Products that are able to give you emotions. products and collections that are able to satisfy inspiring consumers that today are a little bit weaker and very wealth people that are looking for unique and personalized products. We needed to upgrade our infrastructure. We needed to upgrade our systems. And we are, I think, today at par. We're not looking for shortcuts, keeping our strong grip on full price. We are also every day on our efficiencies. Again, every three months, looking at everything we can do to be lighter and more agile. So we want to be more desirable. We want to be unique. also in this very complicated new world. Can we forecast what will happen in the future? No, but we can plan even better and be very agile moving right and left when things happen. Thank you for listening, and we will open now the word to you, and if you have questions, comments, doubts, here we are. Thank you very much.

Thank you. To ask a question, you will need to slowly press star 1 and 1 on your telephone and wait for your name to be announced. Please be aware that we will take and answer one question at a time before moving to the next question. To withdraw your question, please press star 1 and 1 again. We will now go to the first question. One moment please. And your first question comes from Chiara Battistini from J.P. Morgan. Please go ahead.

Hello. Hi. Thank you for taking my questions. The first question would be on maybe if you could share some more color and specific comments on the American and Chinese clusters in Q2, especially for the Prada brand. So putting together the domestic and the tourist, how these two clusters evolved sequentially in Q2. Second question, you mentioned that so far in Q3, nothing to call out that is different versus Q2. The comps do get easier in Q3 versus Q2, so how would you think we should be approaching, or how should we be thinking about these easier comps in the current environment? And then just a clarification on the wholesale swing that we saw in Q2 versus Q1. The comps were indeed very tough in Q2. So is there anything else besides the timing of shipments that we should be thinking about? And what's your outlook for wholesale for the second half, please? Thank you.

Maybe Andrea can take the first one on clusters. Yes.

Sure. Hi, Chiara. On clusters, starting with the Chinese and with reference to the Prada brand, Chinese in Q2 was a bit softer than Q1, but no major changes, I'd say. It was what I would call subdued but stable local demand and softer traveler transactions. North Americans was positive low single digit in H1, with local demand improving, but again, travelers weakening, as we already pointed out. And then we had Japanese, we'll also add, so we do the complete picture as always. Japanese positive low single digit in H1 with no major differences quarter on quarter. And Europeans that was negative low single digit in H1, a bit softer quarter on quarter, driven by travel transactions and broadly stable on local demand. And that's the picture on clusters. On the easier console, pass it back to Andrea.

So when I say nothing to call out, I mean, if I look to Q2, We had a worsening and an improving quarter. And yes, there are easier comps. Yes, I think we have stronger collections, probably even ahead of last year in terms of timing. Yes, Japanese situation and American tourist situation should flatten out. So I could be tempted to saying that we have seen the worst, but I don't think that that could be a proper way of putting it. I think we need to prove it, and we need to sequentially prove it. There is no other reasons today to see a situation which can get worse than this. So we are working fairly positive looking to the next periods, but every day things are changing. Every day, every week things are going left and right. So we keep a very prudent positioning.

Last one was on wholesale, where there's really nothing to point out besides indeed some timing, some phasing effect on deliveries, which we would expect to recover in the second half and therefore end the year in line with our expectations and with the usual controlled approach, but substantially stable.

Great. Thank you very much.

Thank you. And next question, please.

Thank you. Your next question comes from the line of Edouard Aubin from Morgan Stanley. Please go ahead.

Yeah, good afternoon. Thank you for taking my question. So I guess I'll do them one by one as asked. Sorry, Andrea, I guess. On the Prada brand, if you could come back on, you know, the new collection that, you know, you're hopeful that it should be doing well. Could you please come back on kind of the timing of the launch when it's going to be fully available? in the stores, and then you mentioned in terms of, you know, the more specifically in terms of stretching the price range and so on. Are you playing more with the mix? You know, you seem to indicate that you didn't think it was pricing was an issue with the Prada brand. So are you introducing, you know, a greater number of, you know, kind of cheaper, more accessible items there? So that's going to be my first question. Thank you.

So regarding the mix, I think that the mix is an obsession. And we have a great opportunity to sell at higher prices. I think that that has to remain our primary objective. I think we need to prove better up there. And I think that we have been improving. We've been improving in the way we liaison with those consumers, the way we have developed all our new stores, the level of hospitality that we're offering today. So I think that that's the major part. On the other side, I think that it's not to lower enterprise, but it's to remain credible at enterprise. I think that that is what we have been doing and this is what we have been doing this time even more. So I think that we have a well-balanced collections and this is why I feel good about what we are offering to consumer regarding Prada women and Prada men.

Got it. I guess my second question would be for Andrea Bonini. On the lack of operating leverage in H1, so you grew close to 9% like for like, I guess, right, because you opened very few stores. And yet, you know, you had no – you posted no operating leverage. I understand that advertising went up a bit. as a percentage of sales, but hypothetically assuming that you would continue with the same life for life trajectory in H2, should you be able to show some operating leverage or if you can come back on kind of what happened in H1 and what you're expecting for H2? Thank you.

Hi, Eduard. We're pleased with the trajectory. I think, again, it all depends on priorities, and it was a stable profitability level, but in the context of an increase, which is more than slight in terms of profitability, customer facing activities in the context of ongoing retail investments that of course have an impact in terms of dna have an impact in in in terms of in terms of rents and as we always said it's you know that is the priority to continue to invest and for the long-term growth maintaining we also always said, ideally a certain trajectory of progressive margin expansion on a full year basis. And therefore, as I said, we're pleased with an EBIT that has expanded by 8% in the first half year on year. And if we can maintain this level of top line growth, yes, we would also be able to maintain the trajectory that we talked about.

Okay. So, okay, fine. And then maybe the last one is on Versace. So in terms of, I know you're restricted in terms of what you can say, but could you just update us on the timing of the closure of the transaction? And also in terms of your battle plan and more specifically in terms of the management positions at Versace, do you already have a good idea of who's going to do what, you know, there. And then lastly on Versace, again, you're not going to share with us, obviously, any figures, but, you know, philosophically, would you be ready to make the tough decision, you know, quite upfront, quite quickly in 2026, for example, rationalizing your outlet, you know, network, or would you kind of spread out kind of the right sizing of the store estate and so on and so forth, just of how you're going to go about it, you know, in terms of turning around the brand? Thank you.

So as usual, I mean, Versace is not our company, and therefore it's very unusual to give comments on other people's companies, and I will not do that. We're getting ready for everything you're talking about. How long it will take, it depends not on us, but it depends on authorities. We have an estimate that tells us that between – September, October, November, those three months, we should be able to finish up and start. So at the beginning of 2026, we will be able to share much more information regarding what we're going to do. I think that when we signed the agreement, we said that it will take time, which means that we need to do things carefully. And on the other side, I think that the other big thing is not to kill the baby while you cure it. which I think it's the other important aspect. So we will go as fast as we can and as prudent as we can in terms of branding and identity positioning. Okay. Thank you. Thank you. Next question, please.

Thank you. Your next question comes from the line of Erwan Rambo from HSBC. Please go ahead.

Hi. Congratulations on the results, and I'll do them one by one as well. First on the Prada brand itself, despite being slightly negative on retail, you are gaining quite a bit of market share. I understand you've parted ways with Gianfranco Dattis, and I believe, Andrea Guerra, I don't know if it's the right term, but babysitting the brand for now. What do you envisage in terms of maybe changes, little tweaks, either short-term or long-term, to continue to accelerate in terms of market share gains for the main brand?

You know, I think there is – it's tough to imagine my job as babysitting. Long-term. which needs much more than that. I think that we have many different opportunities. I think that the work done so far has been the proof that there is an opportunity for Prada to gain, I think, what deserves, what Prada deserves. And there is, I mean, we've been working for the past years, but the journey is still long. The journey is still long on retail KPIs. The journey is still long on Prada Man, where I think we have a huge plateau and a huge opportunity. I think that our great strength on Ready to Work, men and women, is allowing us to have yet today a crowd in our stores. And, you know, there are many different things that we are doing. that we will continue to do, and I think that most of all is keeping the brand where it is. So the shows, the communication, the events, the activities, I mean, our duty is to constantly feed this positive tension between the branding, the identity, the creative, And as long as this happens, we will conquer market share. Yeah.

Okay. Thank you. Maybe the second question, moving to Miu Miu, I'm wondering what's exciting you most for what's next? Is it more stores? Is it bigger ones? Is it sales densities? Is it product categories? Anecdotally, you might have heard from this, but Isilov Exotica had great things to say about the business that they're doing with Miu Miu. What are the main elements that excite you in terms of future growth for that brand?

So first of all, and again, the first homework that we need to do is to keep Miu Miu where it is. We don't need to be tired about it. We don't need to be bored about it. I think that we still have a journey here. And I think that Mrs. Pratt and the team will continue to go down this path. And I think that this is the most important one. The second being that today we have a much bigger company to be managed. The group and the team is healthy and strong. I think that we have been reached from inside and some additions from outside. and we are in a much stronger platform today. I think that the real obsession has to continue to be leather goods. Leather goods is the greatest opportunity we have. I think that we have reached levels on ready-to-wear which are at global best, and we now need to constantly, even if leather goods in the last three years have been the fastest growing category, there is still a journey to be done there. And this is what we're trying to do every week. So this is, we still have a huge opportunity, as you all know, in North America. We got probably five or six standing stores. Americans are showing to us the love of Miu Miu. So we had to increase some square meters, as we said, probably in the region of, between 10% and 12% during 2025 and probably the same next year, which is sometimes is enlarging stores because people are allowing us to enlarge our stores. Sometimes there's opening new stores, but we also trimmed here and there some useless stores. So it's always very careful. We're still in the region of the 170 stores, so we're pretty – we still have a pretty – reasonable number of stores and this is what we're continuing to do so nothing new sometimes we need to be bored of doing well what we're doing or improve what we're doing week by week okay excellent and then maybe lastly for Mr. Bonini I didn't think gross margin could go higher but I guess there's probably a positive channel mix and possibly

you know, a greater proportion of sales at full price. You've now passed the 80% mark. Is that where we should position ourselves for the next two, three years at around very low 80%?

Yes, that's correct, and the factors are the ones that you mentioned, and we've already been at this level, and we went a bit backward, and now we are again a bit forward, but as we always said, when we are at around 80% is where we think it's sustainable and should be. Okay, fantastic.

Thank you. Best of luck.

Thank you. Next question, please.

Thank you. Your next question comes from the line of Suzy Tabaldi from UBS, please go ahead.

Hello, good afternoon. Thanks for taking my questions. So my first one is about the retail KPIs that you've been mentioning several times and how there is still more way to go. I was wondering, what are the things that increasingly you have learned and you have started doing better than in the past? And what are the things where you think you're still not so good at and there is much more to do?

So the point is, you know, culture. I think culture, retail culture, commercial attitude. I think that these things do not change overnight. We have significantly improved. But if I compare ourselves to the best, there is a gap. So there is still a journey to be done, especially in certain regions of the world where we have improved. We have significantly improved. But we're still behind. And it's people, it's organization, it's the way we interact with our consumers, it's the way we are breaking the ice in the first visits, it's the way we organize certain activities with recurring or VIC. There is a lot of things that we can do much, much better. We have been a little bit transactional in our past. And moving from there to somewhere else takes time and takes a lot of time because the number of stores are well spread across the world. So it's a journey.

Understood. And when it comes to the growth, because in the past you used to provide growth by category, and you said that Miu Miu has been quite well balanced. When it comes to Prada, are you seeing any trends? Because obviously in the industry overall we're seeing leather goods being weaker and other categories being stronger. Can you give us some comments on the trends you're seeing by category and also perhaps by price point, you are obviously expanding the price architecture, but we are seeing this weakness at the aspirational consumer. So is that also something that you think is being a factor and so you're having the higher end, you're more loyal consumer really driving the growth?

I think that there are certain trends happening in the past two years, three years and a half in this industry. Inspiring has been a little bit less dynamic and wealthier consumers have been pretty solid. So I think that we have been following that up. On the other side, what's nice and fantastic about Prada is that As we all know, there is a multi-phase brand. So we have an opportunity to be a little bit more sporty, a little bit more easier, a little bit more lifestyle on certain activity. And I think that that is helping a lot. In terms of categories, I would say ready-to-wear and shoes have been the strongest categories. And leather goods, I think that we have gained significant market share in a market where I think, I'm not sure about, but I think there has been major losses by our competitors.

Definitely. And lastly, just a clarification on the space and the store openings. So, because you've mentioned that in the H1 results there was very little contribution from new stores, but then you're still saying that the space contribution for MiuMiu should be 10-12% for full year. This is going to be really quite concentrated. We should expect quite a high space contribution in H2 from UU.

Obviously, when you say 10-12, you mean in a year time. So it means five or six in six months in terms of space. Then you need to open up. You need to bring it to where it has to be. So I would say that each opening that we have done, each enlarging that we have done in UU has been successful, but it takes time to be seen. So it will be more seen in the second half and the beginning of next year.

Okay, thank you.

But what we said we're doing in terms of openings and enlargements. On Prada, it's a constant journey of opening few and closing a few.

Thank you very much.

Next question, please, or else.

Thank you. Your next question comes from the line of Luca Solka from Bernstein. Please go ahead.

Yes, hello. Good afternoon, and thank you for taking my question. I'm curious to get your thinking about how you're balancing the opportunity to price up and moving into a higher consumer cohort with the need to stay value for money and the stay relevant with aspirational consumers. If you take leather goods, for example, or, yeah, leather goods in general, I would say, how has your sales mix by price band been evolving? For example, about 3,000 euros. If you could give us a sense and how you've been able to stay close to consumers that maybe have not more than 1,500 euros to spend in the category. The reason I'm asking is we've seen quite a significant pressure on volumes on some of your peers, and those that have increased prices the most that take Chanel, for example, have been taking it on their chin. So I wonder how you think about that. I will ask you my other questions afterwards as you demand. So...

I could result a little bit theoretical, but this is what we are first of all trying to do, and I would say also achieving results on. On one side, I mean, we have a strong statement with Prader & Nylon, and it's a huge statement. It's a fantastic statement. We have just introduced in the market a wonderful Explore family. which has been gaining volumes immediately. And I would say that that is what we consider our statement in that part of the market. It's younger, it's dynamic, and it's also very functional bags. And Rhin-Ilon, I think it's our footprint. in what you call, let's call it the affordable, but I would call it one of our foundations. On the other side, we all know that the big opportunity for us was to stretch, and the Galleria volumes are still going up. So I think that that is something that we love, and we are ready for a new strong campaign in the next few weeks. And on the other side, we have introduced right now a number of bags coming from last fashion show, which I think are right where the market is asking us to be. They are simple from an aesthetical point of view. We have accessories, very destructured, very soft. And I think with proper price points that really can allow us to generate a positive mix. I think everything is there in the mix. We have those consumers. Probably we're not being the greatest to host them and to give them what they were asking us in terms of service, in terms of privacy. And I think today we have it. Again, I'm sorry to repeat that it's a journey, but it's a journey. And the improvement is there. It's not price. We had a maintenance price increase at the end of June, so we had it, as we said, during our last call. But the mix is greater than what we have been able to do on pricing. And this is what we will continue to do. We have. What's beautiful about Prada is that it can be sporty, it can be glamorous. This is one of the few brands that can allow us to play three or four games at the same time. Is this easy? No. But this is what the DNA of Prada is.

Understood. That makes perfect sense to me. On a different topic, eyewear, you have a very productive partnership with Esselo Luxottica. I wonder what your thinking is on the smart glasses opportunity and if you're considering it as appropriate for the Prada brand sometime in the future.

It's Lorenzo speaking. Hi, Luca. I take the question if you don't mind. I think that the point of we have a great partnership with Essilor Luxottica. They're friends of us and we are working with them on several projects. I think the biggest point on the smart glasses is how they're going to be in five to ten years. I think Potentially, they're going to change quite a bit the way we see glasses in general and smart products in general. I think it's a journey. I think if we look back in time, we are at the beginning of the smartphone before the era of the iPhone. And so it's a bit early to do like big announcement of smartphones. to say something big about smart glasses but I think it's definitely something that we are looking for and it's definitely seen some of the last product they're going to launch and the technology is quite impressive but we are at the beginning I think of some kind of an era so still I think we have not a clear understanding from the product point of view of what is going to be in the future because still there are points on the four factor functionality and so on but It's coming fast. And I don't know if you ever tried some of them, but especially the last generation that they will launch in a few months, I think it's worth to try to understand the potential. I hope I answered to your question.

Yeah, absolutely. Maybe a small one on your senior management organization. The artist has left. Are you planning, Andrea, to replace him temporarily or permanently?

So, first of all, I've been thanking Gianfranco Dattis for what he has done in these three years, for his efforts, for the business evolution. So, I've been thanking and I will continue thanking him. On the other side, Prada brand is unique and certain times we forget that this is a first generation brand. that maybe doesn't need a CEO but needs a kind of bright coordination between very strong people, ideas, souls, creativity, thoughts, sometimes going with the flow, sometimes going exactly the opposite of the flow. So I've been taking personally this task and I will keep on doing that. We will judge it due course. We will understand. But if it is an interim, it's a long one.

And lastly, if I may, we're going to see another launch of newness in September with most brands presenting new creative directives. What are you planning to do in order to keep the focus and in order to keep the momentum going at new youth?

We should ask Mrs. Prada. All right. And I'm sure that she has all the resources and all the ideas and the things to show to the world that we are still up there.

Let us know if you manage to speak to her then. Thank you. Thank you. Have a good summer. Ciao.

Ciao. Next question, please.

Thank you. Your next question comes from the line of from Bank of America. Please go ahead.

Good afternoon, everyone. Thank you for taking my questions. I have two, and I will also ask them one by one. So my first question would be, could you please share any color at all on relative profitability of Miu Miu and Prada brands as it stands today, and how should we think about the group profitability profile development as Miu Miu starts to be more active from the space growth perspective?

Hi, and thank you. It's Andrea Bonini. Miu Miu, we discussed this in the past, in the sense that the two brands wear and remain at different stages of maturity, different size. Miu Miu has clearly been on a very positive trajectory, easy to imagine, considering the organic growth trajectory and therefore the increase in productivity, the increase in sales density. At the same time, you knew remains in certain aspects behind Prada in the curve and in terms of the investment that is still needed. And to this, we can link the point around space that was made. And going forward, Look, I mean, it's great in a way to have a multi-brand portfolio because indeed at times you can have diverging trends that compensate, that help each other, and the two brands can indeed support each other. At the same time, the way we look at profitability is in a very independent way, one to the other, and both brands need to be on their own trajectory, positive trajectory, and move along that curve.

Perfect. Thank you very much. And my second question is actually a little bit of a follow-up. If we think about drivers of organic growth for the group, and actually if possible, both for MioMio and Prada on a brand level, Could you please help us understand a little bit how we should think about building blocks from volume-mix price perspective? And what are the key initiatives to really drive volume growth from here, particularly for Prada? Or would you say this volume inflection depends more on a cyclical recovery rather than anything else?

I will do my best. I thought that I had answered everything. in different other answers to these questions. I mean, when we look to MiuMiu, there is a geographical opportunity. We're still under-penetrated in most of our countries, except a couple of countries in Asia. We are underrepresented on certain product categories. and the first being Leather Goods, where we are catching up, but there's still a long way to go. And I think that with Miu Miu yet, we have an opportunity with some a little bit wider and larger stores to offer the opportunity for people to buy also at a higher price level. We will start a world tour in Q4 with... with something which is very unique to Miu Miu, very inclusive, very easy, but yet very special in terms of product offering, hospitality offering, and pricing offering. So this is Miu Miu. On the other side, in Prada, I think it's mainly our retail activities and how we go from the buying and we go into the stores and doing our homework in the stores. I think that these are the two main aspects. And obviously, if we have been able to keep up in this 24 months, because now it's 24 months that the industry began the decline. let's imagine that in the near future we can imagine a little bit of a of a softer of the softer landing and maybe probably also a kind of new growth thank you very helpful next question please thank you your next question comes from the line of thomas chalet from city please go ahead

Good afternoon, gentlemen. I have two questions. I'll start with the first one on tourism. You mentioned cyclical demand pressure related to tourism earlier. Is it fair to assume this will continue in Q3 and impact maybe the Prada brand in the same way as in Q2? And could you indicate what's the Prada brand share of tourists spending globally now? and in the key tourist markets, so Europe, Japan, and I guess the rest of Asia. That's my first question.

So in terms of tourism, I think Q3 will be a little bit softer. That is, tourism, American tourism is at its peak in July and then peaks down. Instead, for Japanese, the peak was again end of June, mid-July, and then started to descend. So these are the expectations we have. If I look to traffic patterns, if nothing else changes, I think that we will be basically breaking even in end of August.

By breaking even, you mean Prada brand returning to flat like flat?

No, I'm talking about tourism traffic.

Okay, thank you. And could you remind us the share of tourist spending globally for the Prada brand in the key markets?

70-30, roughly.

70-30?

Yeah, 70 local, obviously.

Okay, mainly Japan, Europe, I guess, and a bit of Saudi Arabia. Yeah. Okay, thank you. And my second question on marketing costs that were up 16% year-on-year in the first half and above 9% of sales, is it due to an unusual phasing of events? And apologies if you've already said that. I may have missed it. Or are you expecting A&P to be above 9% of sales for the full year, which I think would be slightly above a historical average? Thank you.

No, there's no significant phasing, as you always said. I mean, when we say the priority is growth, the priority is to continue to invest behind the brand, particularly at a time where we see some of our competitors actually stepping back a little. We think, considering the performance of the group, we see it as a great opportunity, on the contrary, to accelerate and do what we do to be top of mind.

Thank you, Andrea.

Thank you. Sorry, we're already over time, but maybe we'll take one last person. Thank you.

Thank you. Your final question today comes from the line of Melania Grippo from BNP Paribas. Please go ahead.

Good morning and good afternoon, everyone. This is Marania Grippo from BNP Paribas. I've got two questions. First, I wanted to ask if you could please update your number of outlets. I remember you have been closing quite a few of them and probably you had to close a bit more. So I was wondering if you could please tell us what is the number here. Thank you.

So There is no real, I mean, the journey is going on. We outlet is between a 5% and a 10% of total sales. What is important is that we have drastically changed the business model of our outlets. And I think that... between outlets and wholesale, which are obviously very different channels. They are today in a very, very prudent and conservative percentages.

Okay, thank you. And my other question is on the performance of the online channel. If you could please tell us, give us an idea of how it performed. Thank you.

So we're seeing in MiuMiu a proportional growth. which is not bad at all looking to the growth of the business and I am very interested in looking to our American profile in our e-commerce in MiuMiu, thinking to the small footprint that we have in terms of stores. I think that the growth of of this channel that we could also call it Omni, and we could also add a very strong client services activities. I think that that could be really opening up some new ideas on the way we do business in the United States. On Prada, we had a little bit more positive performance on e-commerce compared to our physical in the last six months.

Thank you.

So I think that with this we have concluded. As Italians, we're going on holiday. And I hope that all of you can have a rest and talk to you soon. See you soon. Thank you. Bye-bye.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.