Prada Group’s annual revenues rose 21 percent to €4.2 billion euros ($4.4 billion) in 2022, hitting their highest level ever after a multi-year turnaround effort, the Milanese group said Thursday. Operating profit jumped 59 percent to €776 million.

Co-founder Patrizio Bertelli, who stepped back as the group’s chief executive officer earlier this year, said brand heat and client engagement were driving “strong and broad-based organic growth” in both Prada and Miu Miu’s stores. Surging sales across most regions — including a whopping 63 percent jump in Europe — were “more than enough” to offset difficulties in China due to coronavirus, Bertelli said.

The group forecast “solid and above market average” revenue growth for 2023, adding it was likely to get a boost from rebounding sales to Chinese clients as the key market reopens to shopping and outbound travel.

New CEO Andrea Guerra, who joined the company in January, also made his first glimpse of plans including upgrades to the retail network and an increased focus on accessories.

Revamped Fashion Offer

The appointment of Raf Simons as co-creative director alongside Miuccia Prada in 2020 kicked off a historic partnership between two of the world’s most well-regarded design stars — and by 2022 their vision for the Prada brand had fully trickled down into the business.

On the runway, Simons’ and Prada’s collections have continued to supply the graphic, directional designs with an intellectual aura that clients are looking for from the brand. But the pair have pushed Prada in a pared-back, dressier, more serious direction in contrast to the brand’s more zany, sporty focus in the years before Simons’ arrival.

In stores, Prada capitalised on renewed interest in the brand by rebalancing its merchandising — emphasising easy-to-wear wardrobe items like nylon coach’s jackets and leather bombers alongside the brand’s more directional fare, which had come to dominate boutiques in recent years. Heavier use of its inverted triangle logos across everything from penny loafers to cocktail dresses also made it easier for the brand to scoop up demand from conspicuous consumers during luxury’s post-pandemic surge.

Miu Miu, too, has enjoyed a renaissance since last year, when it rolled out a more nostalgic identity with sexy fashion twists on collegiate style. Its crop-top and “microskirt” looks were a viral success, as were its “ballet-core” flats and “Wander” quilted handbag (promoted in campaigns by “Euphoria” star Sydney Sweeney).

Capitalising on renewed buzz and further expanding Miu Miu’s audience will be a priority for the year to come, Prada said.

Milestone Results

2022′s financial results mark a milestone for Prada: the group’s revenues finally topped their previous peak, back in 2013, when the brand’s fashion leadership coincided with broad-based commercial success for its Galleria handbag, booming luxury sales in China (where the brand enjoyed an early-mover advantage) and fresh investment following its IPO.

Sales returned to growth in 2018, and were more resilient than some rivals during 2020′s pandemic dip. But Prada continued to lag rival megabrands as big French conglomerates snapped up key real estate and marketing placements, and as the group worked to strengthen its business by trimming distribution (reducing exposure to wholesale and off-price) as well as investing in catch-up efforts on digital and supply chain.

The group met its mid-term target for 20 percent operating profitability just a year after announcing it, and is now within striking distance of its €4.5 billion annual revenue target. New objectives will be announced “in due time,” the company told analysts.

New Leadership’s Priorities

Late last year, Prada named a new group CEO — former Luxottica boss Andrea Guerra — as well as a brand-level CEO hired from Dior, Gianfranco D’Attis, and a new CFO from Goldman Sachs, Andrea Bonini, to boost its organisation and help ease a generational transition. Designer and controlling shareholder Miuccia Prada, 73, and business chief Bertelli, 76, have positioned their eldest son Lorenzo Bertelli as the group’s future leader.

The 34 year-old executive has spearheaded shakeups to the companies efforts on digital marketing and sustainability, but having stepped back from his career as a rally driver as recently as 2017 is still building experience in the group.

Guerra’s presentation to investors Thursday offered his first public comments since joining the group. The executive said that boosting retail productivity — including through store renovations, clientelling and omnichannel services — would be his biggest focus for the year to come.

“The unbelievable work and effort that has been done on brand and creativity, we need to make this work better in our retail network, and in our relationship with our consumers,” Guerra said, adding that the group needed to “build more frequent and meaningful connections with clients.”

His list of priorities for 2023 also included using marketing investments to boost desirability and awareness for both Prada and Miu Miu, and prioritising leather goods at both brands.

Accessories — which are the main driver of profitability for most leading luxury fashion brands — made up 50 percent of group sales last year. That is, in part, a testament to Prada’s continued strength in ready-to-wear. But many investors might see it as a weakness compared to brands like Saint Laurent and Gucci, which have managed to preserve their fashion-driven identities while cutting exposure to the volatile, less-profitable apparel category.

The company said it would grow its accessories business both through new handbag launches and by “nurturing” potential icons in the existing offer.