Prada's profits plummet by 93%

Almost all of the profits of the Italian fashion house Prada in the first half of 2020 were lost due to the Covid-19 pandemic.

Despite the loss of 93% of profits, Prada management is optimistic about the future. Its performance began to rebound in the second half of 2020, thanks to China's sales recovery. In particular, last year, the luxury group incurred a net loss of 54 million euros (4.7 billion rubles) because of the coronavirus pandemic. By comparison, the group made 256 million euros in net profit in 2019.

Last year, Prada's sales in 2020 reached 2.4 billion euros, down 24% excluding exchange rate fluctuations.  Such results have led to many boutiques' closure due to quarantines and a substantial reduction in tourist traffic. On average, 18% of the chain's retail stores remained closed in different countries throughout the year.

The company's operating profit dropped 93% to 20 million euros. In the first six months of the year, operating losses rose to 196 million euros, but the company achieved a positive operating result of 216 million euros in the second half.

According to a Prada representative, the pandemic accelerated the company's digital transformation and omnichannel strategy. In particular, online sales tripled from 2019, and "the brand's relevance in the digital world has grown." During 2020, Prada also revised its investment program, prioritizing vital strategic projects. Some marketing initiatives were canceled or indefinitely postponed without compromising brand awareness.

Photo credit: depositphotos.com.

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