Prada S.p.A. ($1913)

Good day, and thank you for standing by. Welcome to Prada Group Q1 2026 Revenue Update. At this time, all participants in a listen-only mode. [Operator Instructions] And please note that today's conference is being recorded. I would now like to turn the conference over to Mr. Andrea Bonini, Group CFO. Please go ahead, sir.

Good afternoon, everyone, and thank you for joining the Prada Group's First Quarter 2026 Revenue Update. With me today is our Group CEO, Andrea Guerra. And as always, we will start with the presentation 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. And with that, I will hand over to Andrea Guerra.

Hello, everyone. Nice meeting you all. we met a couple of months ago. And I would say that the world is constantly giving us surprises and we are certainly living through a prolonged challenging and unique period for our business, for the industry and for the world. Having said so, I think that Q1 was our toughest quarter in terms of comparables. And I always would love to remind that Q1 2025 was plus 13% on 2024. So we are really pleased to report another organic positive quarter for both Prada and Miu Miu. I think that this was a very challenging quarter considering the comps, considering what is happening in the world and considering the fact that basically of creative directors of major brands change, and this was the first season of their products in the market. Middle East is an issue. As I always remind everyone is, first of all, a territory full of great our people, great stakeholders, great allies in the business, and we would love to see it as fast as we can back to great beauty. So the impact on Q1, always keep in mind that basically, it was the worst moment, but only basically 1 month was approximately 150 basis points on our growth a little bit less on Prada around 100 basis points, much more on Miu Miu close to 250 basis points. So this is just the underlying and the borders of the conversation of today. Prada, solid. We said 2 months ago, it will be a solid year. where underlying performance is stronger than what we report, but it's fine. We have taken further steps to reduce our exposure to outlets. And as a result, our full price growth is above -- well above the reported breakeven level that you see today, and this will become more visible as we move through 2026. In the first 4 months of the year, Prada experienced, I would say, a negative start during the first 15 days of January. As you all remember, we had a great holiday period and maybe clients took a little bit of a rest. Then performance steadily turned positive and has continued to improve solidly after today. Women better than men and men catching up. We recorded with Prada well above average growth in both North and South America. We talked about this region in length and I think that we are really taking back our correct market share, and hopefully, the journey will be still long. We had an above-average performance in Greater China, and Korea. And again, I would repeat the same thing I said in Americas. I think that our fair market share is higher than what we have today. And so happy. And even in Japan, we had a better performance. Europe was slightly below average. Our home market has delivered strong comparables for over a decade. However, some stores in secondary cities have been affected in recent months by decline in tourist spending. We will be back. On Miu Miu, let me start saying that the past 5 years, we have seen a plus 20% on the first year in terms of revenue growth, plus 20% on the second revenue growth year. Then we had a plus plus 58%. Then we had the plus 93% and in 2025, we reached another plus 35%. So it was not just a kind of bonfire but has been 5 years of constant grade growth of Miu Miu. The bar is now high. We are in the ballpark of EUR 1.7 billion, EUR 1.8 billion annually, and we delivered a 2%, which would have been very close to the 5% that we had in mind initially. We have grown well in all places, Americas, where we still have a small footprint, so really a long journey yet. A solid performance in Asia, Greater China, Korea. And again, in Europe, we were slightly lowered than what we expected. My reasoning is, we are a little bit newer in Europe compared to other regions in the world with Miu Miu. So we are more affected by lower tourism expenditure in Europe. And I think we are building our solid foundations with our fantastic stores in Milan, Paris and London, and I think that we will be stronger in the future. I think that Miu Miu has successfully avoided a lot of brand exposures, mistakes, excessive store expansion or enter into many product categories. The brand ranks among the top in desirability, and we will continue to pursue our long-term growth trajectory without any kind of compromise. Just to give you an idea of how healthy the brand is, if we sum up outlet and wholesale in Miu Miu, basically, we don't reach the 12%, 13% of the total sales of the plant. Turning to Versace. I don't think there is a lot to be add compared to what we discussed 2 months ago. We are progressing in line with our plans simplifying business model from many different several perspectives, particularly in terms of sales channels and discounting. The trajectory so far is in line with our expectation. Revenue and EBIT is in line with what we expected so far after the first 4 months. Q3 will be the quarter in which we will be more challenged because we are not doing any kind of show, but we are getting ready for the beginning of the great journey in 2027. Having said this, I will come back at the end, but I will give now the word to Andrea.

Thank you. Starting with net revenues by channel. The group recorded net revenues of EUR 1.43 billion in the first quarter of the year, up 14% at constant FX, plus 3% organic against Q1 '25. Over the period, exchange rates had a significant negative impact of 740 basis points -- at retail level, sales reached EUR 1.24 billion, up 10% at constant FX, plus 1% organic, driven by full price sales and against double-digit comps of 13% in Q1 '25. The conflict in the Middle East, as Andrea mentioned, had a negative impact of approximately 1.5 percentage points on the organic performance for the period. Wholesale was up 40%, plus 17% organic, sustained by the restart of shipments to strategic partners, Saks Global and by the duty-free channel performance. Positive trends on royalties as well, up 84% at constant FX, plus 15% organic, supported by both Eyewear and fragrances. Turning to the next slide, retail sales by brand. product closed the quarter with retail sales up 0.4%, in line with Q4. This result came thanks to stronger underlying trends considering the impact of Middle East and indeed, despite that, another sequential improvement in full price sales, partially offset by further reduction of the contribution from outlets worth calling out the Americas and Asia Pacific, which delivered further quarter-on-quarter improvement over the period. Miu Miu remained highly desirable, continued to grow at a normalized pace with retail sales up 0.4% over the period against the toughest comparison of the year plus 60%. The performance reflects 2.5 percentage points negative impact from Middle East, resulting from higher exposure of the brand to the region vis-a-vis Prada. Finally, Versace a retail performance over the quarter was in line with expectations, contributing in excess of EUR 100 million in retail sales. Moving to the next slide, retail sales by geography. Asia Pacific continued to show strength, growing at plus 13% at constant FX, plus 5% organic. Miu Miu continued to exhibit robust growth. Prada showed further progression quarter-on-quarter, supported by solid execution and positive trends across Mainland China, Hong Kong, Macau and Korea. Performance in Europe was up 2%, down 6% organic, driven by a more pronounced contraction in traveler spending and a more modest decline in local consumption. Such performance reflects a challenging basis with multiyear growth, including Q1 '25 at plus 14%, and I would add that we've seen encouraging signs recently in terms of travel spending. The Americas remained buoyant, up 34% constant FX, plus 15% organic, supported by strong local demand. Both Prada and Miu Miu continue to reap the benefits of the investments we've made in the network, but most importantly, in the teams over the past quarters, and we continue to see meaningful opportunities ahead. Japan proved resilient with local consumption remaining stable against a very positive Q1, '25. Retail sales in the region were up 1% at constant FX and down 2% on an organic basis. And finally, on Middle East, the conflict weighed on both domestic and tourist spending as the region was down 22% over the quarter, both the cost and FX and organic and the impact may be even more material in Q2 if it ends up impacting the whole quarter compared to the 1-month impact of Q1, obviously. With this, Andrea will take over for some final remarks.

I'm happy with the start of the year. And with the acceleration we are observing, especially in the last couple of months and especially on Prada. We remain confident as our brands continue to demonstrate strong desirability. At the same time, we're navigating a phase of significant creative transformation across several brands. So many new collections have been entered in the market and huge investment has been made. And on the other side, we're staying firmly on our strategic path. I think that the rules of the games of this new world are very clear to us, a constant and total unique split of commitment between high end and we have been strengthening organization, product offer, hospitality standards and new store infrastructures. And when I say split of commitments, on the other side, I think, focus on our enterprise offering with a mission to attract new consumers to our brands. I think that this is very clear, and this is what we are doing today. I think that whatever the world is offering us, whatever our specific industry is offering us, we are committed to our group ambitious objectives as we work towards initiating a new and sustained phase of growth. And if you have comments or questions, here, we are to answer them. Gracia.

[Operator Instructions] We are now going to proceed with our first question. Questions come from the line of Ed back from Morgan Stanley.

So Andrea were, I guess, so you spoke quite fast. So I just wanted to clarify to make sure I understood what you said. Did I understand that the last 2 months, March, April, have been a bit better than January and February. And if that's the case, is that excluding trends in the Middle East? Or if you could just clarify, that would be helpful.

So let me say that I removed from any kind of conversation the Middle East effect that I've given you as a general effect that we will see also during the next 6 months. What we have seen in March and April is a constant improvement and happy about it.

Okay. Got it. And then Miu Miu -- I mean, on the last call, you had actually told us that you were expecting a relatively soft start to the year. So again, that was provided, but still, the deceleration is quite steep because I think it's the first time in years that you have single digit and you're increasing your selling space. So your like-for-like, I guess, must have turn negative. In a nutshell, if you exclude the Middle East, what kind of surprised you in terms of the nationality not totally clear to me, it looks like, obviously, Europe was soft as well from Miu Miu, but where was the deceleration the steepest in terms of the brand?

Europe, you said it it's basically, I mean, if I look to comparisons, if I look to relative terms, if I look to our growth rates in Americas, Asia and all the rest, Italy and France are the 2 places where we declined a little bit more than what we expected.

Got it. And you -- are you -- to an extent, are you confident that things could reaccelerate? Is it gradual? Is it -- in terms of -- for the Miu Miu brand during the course of the year?

So I think that, first of all, in terms of comps, things become easier, especially on the second half, especially on certain Prada categories. And we had been seeing a slowdown in tourism in Europe from, let's say, mid-second quarter onwards. So I am still positive. Obviously, when you have everything doing positive, everything doing positive except a couple of countries, I think this is still valid then we need to be successful.

We are now going to proceed with our next question and the question comes from the line of [indiscernible] Bismuth from HSBC.

My first question is about the some of your peers have provided the initiation of the performance for the month of March. Will it be possible to have an indication about that? And -- or has it been improving for the month of April? And finally, what is the exposure of to Miu Miu the Middle East, please?

I think we have given the -- all the numbers that we feel to give you, I mean, on Middle East, you have always to consider 3 effects. On Middle East, there is a touristic effect in the Middle East, which is slightly balanced by the fact that Middle Easterns are spending more money in their local countries. But on the other side, you also have to consider that main 3 airports of Middle East have been slowing down. So even Asian rim in Europe has been a little bit declining. So -- and the numbers we have given the effect on Miu Miu, it will be in the region of the 250 basis points. And this is Middle East, obviously.

We are now going to proceed with the next question. And the questions come from the line of Oriana Cardani Intesa SanPaolo. questions.

The first one regards the exposure to travel and retail. Can you remind us the weight of this segment on your total revenues?

Oriana, not a number we disclose. I would expect it to be not dissimilar from the rest of the sector.

Okay. And my second question is on the direct-to-consumer growth profile in the quarter. If you can quantify the perimeter effect for Prada and for Miu Miu?

I'm not sure I understand the question, sorry. .

Yes. Regarding the regrowth of the retail for Prada and Miu Miu, can you tell us the perimeter effect, so the impact of the perimeter effect?

Space, new openings. That's what you SP1 Yes, SP-2 Understood. Understood. For Prada, we can consider the performance like-for-like. For Miu Miu, there is indeed a contribution from new openings helping performance what we see in like-for-like store is that there's a very, very good number of them that are steady, and there are a few with exceptional performance and productivity in 2025, which are replacing a bit. And it won't be a surprise that, as Andrea already said, they are in Europe, particularly in Italy and in France. And having said that, their KPIs remain extremely good.

We are now going to proceed our next question. the questions come from the line of Chris Go from CLSA.

So firstly, specify with you regarding the China cluster trends and also other major clusters. So basically, how are these like Japanese South Korean and also other major classes like American is doing. So can we specify a little bit on that just to make sure we understand the full picture. I understand when you comment on regional performance, you comment a little bit. I just want to specify. So for Tennis cluster, do you still see the positive growth like you saw previously? How is the trend 2Q-to-date? And how about other clusters to today trends? This is my first question.

It's positive for -- with reference to the Chinese cluster that you asked about specifically. It is positive for Prada. It's positive for me, therefore, it is positive at group level. And as we said, it's solid. When we look at the clusters, from the comments we already made, I believe you can infer that the softness was with reference to Europe, and with -- in Europe, I mean, of course, you have a European component and you have then a tourist traveler component. And the traveler component to risk component is the one that was impacted the most in Q1 by also the events we know, but also when we look at the European cluster was softer. The rest as we already said, I mean, very, very solid. Yes, with the exception of the release of course.

Right, right. This is very helpful. So the second question is regarding the growth drivers. So some other luxury actually commented on some sequential improvement noted on the new consumer recruitment. So I just want to understand more like regarding the current growth has been seen on Miu Miu and also on Chinese. Are you also seeing a similar trend? Or actually, you are seeing still more balanced growth between new customer acquisition and existing customers?

So what we have, I think, Miu Miu still have a good pace so -- and has it had its own history and trajectory and today's reality in China as they were asking. Looking to Prada we have seen since June, July last year, sequential improvement on all KPIs. And we have seen it. We have seen it slightly in the first month, some up and downs, and we have seen it some more vigorous evolution between pre-Chinese New Year, after Chinese New Year and the last couple of months.

Right. So the last quick 1 is about -- can you specify more about like the pricing, like pricing and mix contribution for Prada and Miu Miu?

Yes. As I was saying in the last, I think that we have -- we are having a kind of businesses in one. So on what side we're seeing volumes in the entry price segments. On the other side, we're seeing extremely great value on high-value transactions. So I think that all of this at the end is giving a kind of an average. But inside the average, there are two very big differences.

We are now going to proceed with our next question and the questions come from the line of James Grini from Jefferies.

I'll have 3 or 4 very quick ones, so I'll ask them one by one, if okay. Can you perhaps tell us how much stronger the full price sales growth was at Prada compared to that plus 0.4% that you reported for the brand. That would be the first one, please.

One give more than what we said. It's -- as Andrea said, is a solid number.

All right. And then, I guess, Andrea, specifically during your prep remarks, that there was almost like in promptu addition of talking to seeing encouraging signs in travel spend recently in Europe. Can you perhaps expand a little bit on that because it felt a little bit surprising. So I just wanted to check whether I got the right end of that specific?

It's green shoots that we've seen now and then. I think we mentioned it before that we saw a very positive impact, for example, in Italy and Milan in the period of the Winter Olympics. And -- what I was referring to is that recently, very recently, I think we've seen not just in Italy, but more broadly in different parts of Europe, some positive trends that are encouraging. But as always, I think it's already quite complicated, I think, to read trends into quarterly results. I think it's even more difficult when we want to read too much into monthly or biweekly trends. But nonetheless, I mean, considering even since the start of the year, the bad news geopolitically, macroeconomically and so on, I mean, have been significant. I mean let's also start looking at the green shoots when we see them.

Got it. And just quickly following on Miu Miu. It sounds like you're comfortable with the idea that you might have an acceleration in the second half of the year especially. Can I just ask, do you sense that Q1 was the trough for brand delivery, specifically.

I would love to be a magician and being able to really answer your question. I mean there are so many things happening in the world that is very complicated too. I mean what I said is what I repeat in terms of comps, there is a better off second half in terms of the durability of the brand, we're still at the maximum. The team is enthusiastic and great. I think that new products insertions are all great. So let's go and battle it and fight for it and let's see what happens.

Great. And I guess one last one, sorry, bear with me. You talked about a lot of newness efforts elsewhere in the industry. And I presume having to cope with marketing budgets being elevated in other brands. Have you responded? Have you stepped up efforts from your own perspective? Or have you maintained the line in terms of intensity of marketing investments. So to get a little bit of a sense of

We maintain our line -- we maintain our path. We maintain our line, nothing different. I mean, we are so happy of how we have come out in the fashion shows, always in the top 5 shows of the season. We have seen the kind of interaction with our clients and fans across the world. So really nothing -- we didn't do nothing, and we have gone through our own journey.

[Operator Instructions] We are now going to proceed with the next question. Question come from the line of Milan a grip from BNP Pariba.

This is Maia Grupo from BNP Paribas. I would like to ask you if you could please give us an idea of what was the performance by category for both brands, I mean, which category did outperform in Q1?

So as I said, on Prada, women was better than man. Leather goods came first. ready-to-ad was good and shoes was sturred.

And the same thing applies to Miu Miu?

Yes.

And also, I have a follow-up on what you mentioned regarding the full price sales. I just would like to understand you're continuing to cast your number of outlets, if you can update there?

In the next 3 years, we will trim yet another 5, 6 stores. And for 2026, basically, we are done.

We are not going to proceed with the next question, and the questions come from the line of Mavis from DBS.

Can I just ask, firstly, our wholesale organic growth was very strong at 17%. And how much of that wholesale growth is for Versace versus Prada and Miu Miu, please?

No, it was basically the -- yes, yes. So there is no Versace in there, but it's the -- what we discussed at the end of the fourth quarter and the effect of the tax, balance up and down.

Great. And then my second question is that on our Q1 retail organic growth is 1%. And because I think partly because again, it's a very strong comp a year ago. So if we go along the year as the year progressed, the comps actually will use. So what is the realistic organic growth range for Prada group into the coming quarters? Especially into the second half when the base effect would be much lower. Thank you.

I believe that everything we discuss until now is to try and give a sense of what we see, what we feel, what we believe may happen and at the same time of the many uncertainties that remain. And therefore, I don't think we can be more specific than what had anything to what we already said in that regard.

Definitely. And my last question is that what is our latest proportion of sales coming from tourist consumption globally year-to-date? And how would such level compare to like past 2 to 3 years? We've never given that figure, and I believe there was the same question asked before to what -- to which I give the same answer. I'd say that if you compare the past couple of years, I mean, like travel flows change all the time. And we've seen it also in the past few months, think about what's been happening in Japan, for example, and so on and so forth. But the overall mix and contribution doesn't change that significantly.

We are now going to proceed with our next question and the questions comes from the line of Paola Carboni, Equita Sim.

Sorry, just 1 question from my side left. It's about the space effect at Miu Miu, should we also assume that this should become more evident in the next few quarters? And if you can remind us your plan in this respect for 2026 and 2027.

Paul Andre. The answer to the second part of the question is, Andrea, set it at in the past call, we've got an expectation to add for Miu Miu between -- by the end of the year, another 5 to 10 stores. So no changes in that regard. And therefore, I mean, of course, like these stores will take time to get to a run rate and also the openings will be in the next months, some closures, some more towards the end of the year. But yes, there would be even if not meaningful, but there would be some impact coming positive.

And do you confirm, if I remember correct, that we shouldn't envisage a further space effect further store openings for 2027 or am I wrong?

Significant. No, not significant because, I mean, as we said, there will be, of course, openings, but there will also be closures. And so net-net, no material on Miu Miu. I believe the question was on Miu Miu. On Prada net-net, we will probably be negative with more closures than openings.

We are now going to proceed with our next question. The questions come from the line of Lucas from Bernstein.

I seem to remember, Andrea, from one of our last conversations that you are planning to attract attention back to Prada that you have a few big white rabbits that could potentially be extracted from your hat without revealing any secrets, could we maybe get an idea of where you would get them? Is it major events that you're planning, is it a major store openings. We are, I think, in a market where the wind is very, very, very weak. And so Cabin is important catching attention from consumers is very important. We see that your competitors have done that by appointing new creative directors. I wonder what you could counteract to that.

So first of all, I think that we have 2 regions in the world where we still have to conquer our fair share. And it's 2 big regions in the world, and it's America and China. And I mean, we are doing and we are showing to those markets a very high level of commitment always keep in mind the purchase of buildings on Fifth Avenue and future projects there. And on the other side, in China with the Ronja development I think that we have built our representor in China. And I think that both teams are really evolving extremely well, and we still have, I think, a long journey of opportunities and market share gain. Then we are -- I think that we are very well balanced on today on certain things where we were not. So we were not fully ready for high-value transactions. I think we are today. I think that we have to prove to ourselves more than to our clients. And I think that in the last 12, 18 months, we have been able to do it. And we sold more precious bags in these first months compared to all 2025. So we are evolving and we are growing. Similarly, we always had a way to attract with certain of our product categories, new clients. We have done a huge push on our in island projects, our Unesco and the CBN project during the month of April out of stores and in the stores with a real new real collection, very well received and with very competitive pricing. So I think we are going both ways. We discussed about Alexander house, but we are now going to open in the next 12 months, at least another 3 or 4 big places for Prada and we will talk about them as we move along. I think that we are over with the questions. Thank you to all of you, and see you soon.

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