Prada Group reported strong H1 2024 results today, with revenues growing by 17 percent (at constant exchange rates), exceeding analyst expectations. Adjusted EBIT growth was up 17 percent, which was sharply lower than than 48 percent growth in H1 2023, though margins remained solid at 22.6 percent.
Growth was explosive for Miu Miu, which comprises 23 percent of group revenues (up from 15 percent at the end of 2023), with revenues growing by 93 percent for the period of January to June after a searing 95 percent growth rate in Q2. Prada, comprising 75 percent of revenues, reported more moderate growth of 6 percent for H1, while Church’s was up 15 percent for H1 after closing down 13 percent in 2023.
This rate of growth puts Prada Group well above that of other major luxury brands this earnings season with LVMH reporting H1 growth of 2 percent and Kering down 11 percent. Hermès reported growth of 12 percent in H1, yet unlike Prada, sequential quarterly growth was much weaker.
One of the differentiators among performers for H1 so far has the evenness of sales performance across geographies. Weaker performers have struggled in Asia, apart from Japan, while top performers continued to report growth across geographies.
Prada Group reported growth in Asia (which, excluding Japan, comprises 36 percent of revenue) of 12 percent, Europe (29 percent of revenue) at 18 percent, and the Americas (18 percent of revenue) at 7 percent. Like most other luxury brands this earnings season, growth in Japan (11 percent of revenue) was especially strong at 55 percent, driven in many cases by Chinese and other tourists arbitraging price disparities.
Prada has been the best performing luxury organization in 2024 with a total return of around 26 percent year-to-date, though volatility has been very high and the share price has trended down with the rest of the FSW High Frequency Luxury Monitor All Luxury Index since June. Compare this with the -14 percent total return from the industry’s market cap giant LVMH.
There may be a little room to grow with a P/E of 22.2x, which is on par with LVMH (21.5x) and Moncler (23.2x) but well below the levels of Brunello Cucinelli (46.4x) and Hermès (45.9x), though these are well down from the 50-60x valuations that we saw late last year.