Prada fashions 2020 operating profit from second half rebound

© Reuters. Coronavirus disease (COVID-19) outbreak in Geneva

MILAN (Reuters) – Italian fashion group Prada said on Tuesday that it would close 2020 with an operating profit after a strong recovery from a first half coronavirus-driven sales slump.

The Milanese luxury brand said it had decided to provide the unscheduled business update before disclosing full-year results in March in order to avoid uncertainty over its performance due to the COVID-19 pandemic.

The fallout from the COVID-19 crisis had triggered a 40% decline in Prada’s revenues in the first half of the year, leading to a 196 million euros operating loss ($241 million).

That compared with a 150 million euro operating profit in the six months through June 2019.

Prada said sales had improved in the second half of 2020 despite store closures corresponding on average to 9% of the network, “culminating for the retail sales in a full recovery to 2019 levels in the month of December”.

In the July-to-December period retail sales, which account for around 90% of Prada’s total, posted a 6% decline at constant exchange rates.

“This seems a good feat, and probably better than what most other groups will report, on the back of a strong consumer driven recovery for the Milanese brand”, Bernstein analyst Luca Solca said of Prada’s update.

Europe and Japan suffered due to the lack of tourist flows, Prada said, with a positive performance in the Americas, the Middle East, Russia and above all Asia, where China grew by 52%.

Wholesale sales declined as Prada pressed on with a strategy, which it began in 2019, to shrink its network so as to have uniform prices for its goods.

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“I am very satisfied with how we have faced the serious difficulties of the year just ended,” Chief Executive Patrizio Bertelli said in a statement.

($1 = 0.8150 euros)

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