Core Viewpoint - Prada is considering a takeover of Versace, with negotiations entering a final phase and a potential announcement expected soon [1][4]. Group 1: Deal Details - A potential deal to acquire Versace, currently owned by Capri Holdings, could be announced on Thursday, with the price possibly reduced to 1 billion euros ($1.1 billion), which is one-third lower than initial estimates [2]. - Capri Holdings' CEO John Idol is expected to visit Milan to discuss the deal, indicating active engagement in the negotiations [3]. - Prada had exclusive access to Versace's financial data for four weeks starting in late February, which has since been extended, suggesting thorough due diligence [3]. Group 2: Company Background - Versace was acquired by Capri Holdings for 1.8 billion euros in 2018 but has been operating at a loss recently [6]. - Donatella Versace recently stepped down as chief creative officer, with Dario Vitale, a former Miu Miu designer, taking over the role [6].

Goldman Sachs is reportedly leading a group of top investment banks to help Italian design giant Prada bankroll its planned $2.5 billion bid for luxury rival Versace. The David Solomon-led lender has been advising the fashion powerhouse on its bid to acquire Versace from parent company Capri Holdings, the Milan-based business daily MFF reported on Friday.Prada is looking to drum up $1.5 billion to complete the takeover, with another $1 billion earmarked to relaunch and revive Versace’s Medusa brand, the new ...

Financial Performance - The company reported strong revenue and profit growth driven by brand appeal and strict execution, achieving solid performance and progress in 2024 [11]. - The net revenue for the year ended December 31, 2024, was €2,977 million, an increase of 16.6% from €2,552 million in the previous year [19]. - Gross profit increased by €296 million, representing a growth of 17.1%, with the gross margin rising to 68.2% from 67.9% [19]. - Net income for the year was €850 million, accounting for 28.5% of net revenue, compared to €567 million or 22.2% in the previous year [21]. - The total equity of the company was €3,325 million as of December 31, 2024, compared to €2,843 million in the previous year [25]. - The company received €170.5 million in dividends during the year, a significant increase from €24.6 million in the previous year [23]. - Total revenue for 2024 reached €2,976,971,031, an increase of 16.6% compared to €2,552,340,867 in 2023 [129]. - Net income for 2024 was €849,706,977, up 50% from €566,740,484 in 2023 [129]. - Operating income (EBIT) improved to €1,006,739,864, reflecting a growth of 18.4% from €850,198,747 in the previous year [129]. - Cash and cash equivalents increased significantly to €601,742,739 from €225,027,603, marking a growth of 167% [128]. Sustainability and Corporate Responsibility - The company continues to execute its sustainability strategy, focusing on climate change and investing in green energy [16]. - The company is committed to biodiversity and has expanded its efforts to understand the impact of its procurement on biodiversity [16]. - The company is focusing on sustainable development strategies, including greenhouse gas reduction and the use of low-impact materials in products and packaging [46]. - The company has identified and established mid-term goals and internal key performance indicators (KPIs) to monitor progress, particularly in carbon reduction and material transition [47]. - The company emphasizes compliance with labor laws and ethical standards throughout its supply chain, ensuring adherence through monitoring and inspections [42]. Digital Transformation and Innovation - The company is advancing its digital transformation plan to enhance technical capabilities across various activities [15]. - The company emphasizes continuous innovation through research and development, focusing on new or improved materials and design concepts [59]. - The company participated in the 37th America's Cup and established a groundbreaking partnership with NASA for spacesuit design, showcasing its technical expertise and innovation [11]. Governance and Board Structure - The board consists of 11 members, including 6 executive directors and 5 independent non-executive directors, with female representation at approximately 45% [72]. - The board's diversity policy emphasizes that diversity should not be limited to gender, reflecting a broader commitment to inclusivity [72]. - The board evaluates operational and financial performance, including annual budgets and quarterly results, during its meetings [74]. - The company has established a code of ethics and governance policies in accordance with Italian law, ensuring adherence to legal and regulatory requirements [90]. - The board confirmed the effectiveness of the internal control and risk management system throughout 2024, with no significant deficiencies found [111]. Risk Management - The company has established a risk management system to manage, forecast, and mitigate risk exposures for long-term sustainable business development [33]. - The company manages credit risk through a control system based on customer reputation and debt repayment ability, with no significant risk identified in current assets [48]. - The company faces foreign exchange risk due to its extensive international presence and manages this risk through derivative contracts to hedge future cash flows [51]. - The company uses derivative instruments to hedge interest rate risk by converting floating-rate debt into fixed-rate debt [52]. Shareholder Communication and Dividends - The company aims to provide sustainable dividends while considering financial performance, cash flow, and operational needs [122]. - The company maintains high transparency in communication with shareholders and the financial community, holding regular briefings and meetings [123]. - The company’s annual general meeting in 2024 was held online, with all resolutions presented to shareholders being formally passed [125]. Financial Compliance and Audit - The independent financial statements are audited by Deloitte & Touche S.p.A., with external auditors appointed every three years [64]. - The total audit fees for Deloitte & Touche S.p.A. for the year ending December 31, 2024, are €550,000, an increase of 7% from €514,000 for the year ending December 31, 2023 [94]. - The company has implemented strict anti-corruption policies and auditor independence measures to support compliance with laws and regulations [109]. Employee and Talent Management - The company emphasizes talent management and retention through training programs and performance management processes [36]. - The company’s compensation policy aims to attract and retain talent, with a focus on competitive remuneration linked to performance and business objectives [97]. - The compensation structure includes fixed, variable, direct, and deferred components, tailored to different roles and regions [98]. Market and Brand Development - The leather goods category saw significant growth, with new products being well-received and classic styles continuing to sell well [11]. - The Miu Miu brand continues to attract audiences with its disruptive aesthetics and has launched exclusive collaborations that resonate widely [12]. - The Church's brand has shown positive growth momentum due to strategic efforts over the past few years [14].

Financial Performance - Prada Group achieved a net revenue increase of 17% to €5.4 billion, marking the fourth consecutive year of double-digit growth[11]. - Net sales for the year ended December 31, 2024, reached €5,310,026 thousand, representing a 14.9% increase from €4,622,882 thousand in 2023[113]. - Operating income (EBIT) increased by 20.5% to €1,279,550 thousand, compared to €1,061,692 thousand in the previous year[113]. - Net income for the year was €843,400 thousand, a 25.2% increase from €673,392 thousand in 2023[113]. - The gross profit margin decreased slightly to 79.8% from 80.4% in the previous year, despite an increase in gross profit of €534,921 thousand[113]. - Retail sales net revenue increased by 15.7% to €4,849,208 thousand, with Miu Miu showing a remarkable growth of 93.2%[121]. - The operating cash flow for 2024 was €1,212,784 thousand, significantly higher than €725,596 thousand in 2023[121]. - The company's equity attributable to shareholders rose to €4,399,365 thousand from €3,853,795 thousand in the previous year[121]. - The net financial surplus increased to €599,602 thousand, compared to €196,908 thousand in 2023[121]. - The company reported a net revenue of €843.4 million for the year ending December 31, 2024, representing a 15.5% increase compared to €673.4 million in the previous year[181]. Retail and Market Expansion - Retail sales grew by 18% year-over-year, driven by strong performance in full-price sales[11]. - The company has completed approximately 90 renovation and reset projects in its retail network during the year, enhancing customer experience[118]. - The number of stores operated by the group reached 609 after opening 38 new stores and closing 35 during the year[122]. - Prada operates 609 directly operated stores globally, with a significant presence in Europe, Asia-Pacific, and the Americas[14]. - The Asia-Pacific region accounted for 33.1% of retail sales net revenue, totaling €1,604,413 thousand, with a growth of 10.9%[121]. - The Group is expanding its market presence with the opening of the first Prada Caffè in London, enhancing its brand experience[60]. Strategic Investments and Development - The company has deployed nearly €500 million in strategic investments across retail, industrial plans, and technology[11]. - The Group's new knitting factory in Torgiano (Umbria) is part of its strategy to enhance production capabilities[57]. - The Torgiano center expansion is set to open in May 2024, reflecting the company's commitment to innovative and efficient operations[119]. - Prada Group aims for sustainable growth above market levels despite ongoing industry complexities, focusing on investments in retail, industrial strength, and technology[190]. Sustainability and Ethical Practices - Prada Group has committed to sustainability by implementing a zero-fur policy across all brands and launching a collection made from recycled nylon[51]. - The sustainable development strategy is built on three pillars: Earth, People, and Culture, aiming to reduce environmental impact and promote inclusivity[83]. - The company emphasizes the importance of employee well-being and diversity, fostering an inclusive culture[85]. - The company has established a sustainability strategy focusing on greenhouse gas reduction and the use of environmentally friendly materials[166]. - Prada Group's commitment to sustainability includes science-based greenhouse gas reduction targets and the use of low-impact materials[84]. Leadership and Governance - The Group's leadership transition includes Andrea Guerra as CEO, implementing a new ethical code and human rights policy across the organization[53]. - Patrizio Bertelli has been appointed as the Chairman of the Board since April 24, 2024, and previously served as Co-CEO until January 26, 2023[195]. - Miuccia Prada has been re-elected as Executive Director on April 24, 2024, and has played a significant role in establishing Prada as a leading luxury brand[197]. - Paolo Zannoni has been serving as Executive Vice Chairman since May 11, 2023, and has extensive experience in investment banking and corporate governance[200]. Innovation and Cultural Engagement - Prada's strategic vision emphasizes cultural engagement and the creation of a continuously evolving language to interpret contemporary fashion[12]. - The Group's brands continue to focus on increasing brand value and attractiveness in the luxury market[63]. - Prada Group's Luna Rossa sailing team won the Prada Cup for the second time, showcasing the brand's commitment to sports and innovation[55]. - The company has streamlined its distribution network, focusing on high-quality partnerships and targeted strategies[79]. - Prada Group has been supporting the Prada Foundation's interdisciplinary activities since 1993, focusing on cultural and artistic initiatives[92]. Risk Management - The company actively combats counterfeiting through legal actions and preventive measures, including global brand registration and RFID technology for product authenticity[149]. - The company faces various risks that could disrupt operations, including geopolitical tensions and extreme weather events, potentially leading to economic losses such as decreased sales and increased labor costs[162]. - Credit risk is primarily associated with trade receivables from wholesale channels and business partners, managed through diversification and monitoring of counterparties[168]. - The company has established a tax risk management system to enhance its tax control framework, allowing it to join the Italian tax authority's compliance regime[175].

Group 1 - The haute couture market is significantly influenced by the economic conditions in China, creating a dependency that can lead to both benefits and challenges for the industry [1] - When the Chinese economic environment is favorable, the haute couture industry experiences growth, but during unfavorable conditions, the entire sector tends to suffer [1] - Recent years have seen a predominance of unfavorable economic conditions impacting the haute couture market [1]

Prada S.p.A. (OTCPK:PRDSY) Q4 2024 Earnings Conference Call March 4, 2025 8:00 AM ET Company Participants Andrea Bonini - CFO Patrizio Bertelli - Chairman & Executive Director Lorenzo Bertelli - Marketing Director & Head, CSR Andrea Guerra - Group CEO Conference Call Participants Edouard Aubin - Morgan Stanley Chiara Battistini - JPMorgan Susy Tibaldi - UBS Erwan Rambourg - HSBC Oriana Cardani - Intesa Sanpaolo Thomas Chauvet - Citi Melania Grippo - BNP Paribas Linda Huang - Macquarie Louise Singlehurst - G ...

Financial Data and Key Metrics Changes - The company reported revenues of EUR5.4 billion, up 17% at constant exchange rates, marking the fourth consecutive year of double-digit growth [6][26] - EBIT reached EUR1.28 billion with a margin of 23.6%, an increase from 22.5% in the previous fiscal year [7][28] - Net income increased by 25% year-on-year to EUR839 million [36] - The company closed the year with a net cash position of EUR600 million after significant capital expenditures and dividends [7][39] Business Line Data and Key Metrics Changes - Retail sales totaled EUR4.8 billion, up 18% versus fiscal year '23 at constant FX, driven by full-price sales [27][29] - Wholesale sales increased by 7% year-on-year, with a 4% rise in Q4 [30] - Royalties grew by 17% year-on-year, supported by eyewear and fragrances [30] Market Data and Key Metrics Changes - Asia Pacific saw a growth of 13% year-on-year, improving to 16% in Q4 [33] - Europe grew by 18% over the year, maintaining a solid growth of 16% in Q4 [33] - The Americas reported a 9% increase in retail sales, with Q4 showing an 11% improvement [34] - Japan was the best-performing region, up 46% year-on-year, with Q4 growth at 31% [34] - The Middle East also performed well, with a 26% increase over the year and 30% in Q4 [35] Company Strategy and Development Direction - The company aims for sustainable long-term growth despite challenging market conditions, focusing on brand strength and product quality [8][10] - Continued investment in store renovations and retail network improvements is a priority [8][28] - The company is committed to sustainability, reducing greenhouse gas emissions by 61% and promoting gender equality within management [14][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining growth trajectories despite a challenging environment, particularly in Greater China [42][48] - The company is prepared for potential ups and downs in the market, emphasizing a solid trend in brand performance [48][43] - The outlook for 2025 remains cautious but optimistic, with expectations of continued investment in brand desirability and market presence [43][41] Other Important Information - The company plans to increase its dividend per share to EUR0.164, reflecting a payout ratio of 50% [39] - Capital expenditures for fiscal year '24 were EUR493 million, with expectations for an increase in 2025 [37][119] Q&A Session Summary Question: Outlook for Prada's growth in 2025 - Management is confident in maintaining growth for Prada, expecting potential fluctuations but a solid overall trend [48] Question: Acquisition interests in Versace and Jimmy Choo - Management refrained from commenting on rumors but acknowledged differences in the current company structure compared to past acquisition strategies [53] Question: Profitability outlook for fiscal '25 - The focus will remain on investing behind brands rather than cutting back on marketing, aiming for moderate margin expansion [58] Question: Growth by nationality in Q4 - Chinese consumers showed low single-digit growth, while North Americans improved to high single digits [69] Question: Impact of macroeconomic conditions on the U.S. market - Management noted that consumer reactions to macroeconomic changes are not immediate, but they remain optimistic about the U.S. market [81] Question: Profitability gap between Miu Miu and Prada - Miu Miu's profitability has increased significantly, and the company aims for sustainable growth across both brands [92] Question: Retail expansion plans for 2025 - The company expects to see an increase in store openings, particularly for Miu Miu, with a focus on balancing growth and profitability [102] Question: Sales per square meter by brand - Miu Miu's productivity has substantially increased, prompting plans for more store openings [110] Question: Capital allocation and potential investments - The company plans to increase CapEx to around EUR550 million in 2025, focusing on retail and industrial investments [119] Question: Pricing strategy for 2025 - Management indicated there is room for upward pricing adjustments without drastic changes, focusing on a balanced price architecture [130] Question: Chinese consumer behavior and clienteling strategy - The company noted a stable environment for Chinese consumers, focusing on events and tourism for sales [138] Question: Dual listing considerations - There has been no progress on dual listing discussions [143]

March 4th 2 2025 FY-24 Results Presentation Milan, March 4th 2025 March 4th 1 2025 Disclaimer The information contained in this document is for information purposes only and does not constitute an offer, solicitation, invitation or recommendation to subscribe for or purchase any securities, or other products or to provide any investment advice or service of any kind. This document is not directed at, and is not intended for distribution to or use by, any person or entity in any jurisdiction or country where ...

Financial Performance - Prada Group recorded a net revenue of €5,431.6 million, representing a 17.0% increase compared to 2023 at constant exchange rates[3]. - The group's net income was €838.9 million, a 25.0% increase compared to 2023[3]. - EBIT was €1,279.6 million, accounting for 23.6% of net revenue, an increase of 20.5% from €1,061.7 million (22.5% of net revenue) in 2023[3]. - The total sales net revenue for the year ending December 31, 2024, was €5,310,026 thousand, a 14.9% increase from €4,622,882 thousand in the previous year[20]. - Net income for the year was €843,400 thousand, reflecting a 25.2% increase from €673,392 thousand in the prior year[20]. - The gross profit margin decreased slightly to 79.8% from 80.4%, with gross profit amounting to €4,336,692 thousand, up 14.1% year-over-year[20]. - The adjusted EBIT for the year was €1,279,550 thousand, which is 23.6% of net revenue, up from €1,061,692 thousand or 22.5% in 2023[27]. - The total comprehensive income for the year was €884,231 thousand, up from €648,094 thousand in 2023[25]. - The net revenue for the year ending December 31, 2024, was €838,907,132, an increase from €671,026,021 in 2023, representing a growth of approximately 25%[32]. Retail Sales Performance - Retail sales net revenue increased by 18.0% at constant exchange rates compared to 2023[3]. - Retail sales net revenue for the Prada and Miu Miu brands increased by 4.2% and 93.2% respectively at constant exchange rates[3]. - Significant double-digit growth in retail sales net revenue was observed in Japan (+45.8%), the Middle East (+26.0%), Europe (+17.5%), and the Asia-Pacific region (+13.1%); the Americas recorded a high single-digit growth of +8.9%[3]. - Retail sales net revenue in the Asia-Pacific region increased by 13.1%, with significant improvement in the fourth quarter despite a challenging market[69]. - Retail sales net revenue in Europe rose by 17.5%, supported by local customer and tourist demand[70]. - Retail sales net revenue in the Americas increased by 8.9%, achieving double-digit growth in the second half of the year[71]. - Miu Miu recorded exceptional growth of 93.2% year-on-year, with strong performance across regions and product categories[68]. Store Operations - The group operates 609 directly managed stores globally as of December 31, 2024[4]. - The group opened 38 new stores and closed 35, resulting in a total of 609 directly operated stores by year-end[14]. - The total number of stores as of December 31, 2024, was 609, slightly up from 606 in 2023, with a notable increase in the Asia-Pacific region[30]. - The company reported a total of 215 directly operated stores in the Asia-Pacific region as of December 31, 2024, compared to 196 in 2023, marking an increase of approximately 9.7%[30]. Financial Position and Cash Flow - As of December 31, 2024, the net financial position was positive at €599.6 million[3]. - The group's cash position at year-end was €600 million, after capital expenditures of €460 million[13]. - Cash flow from operating activities amounted to €1,998,769 thousand, an increase from €1,694,951 thousand in the previous year[24]. - The net cash flow from operating activities after interest and taxes was €1,651,617 thousand, compared to €1,155,281 thousand in 2023[24]. - The net financial position as of December 31, 2024, was €599.6 million, a significant improvement from €196.9 million in 2023[82][83]. - Cash and cash equivalents rose significantly to €1,011,563 thousand in 2024, compared to €689,519 thousand in 2023, marking an increase of 46.8%[21]. Capital Expenditures and Investments - Capital expenditures for the year reached €493.3 million, with non-current assets (net value) increasing to €3,260.5 million from €3,007 million in 2023[79]. - Capital expenditures for the period included €415,577 thousand for new acquisitions, with significant investments in retail property renovations and store resets[41]. - The company signed a new €800 million sustainable-linked revolving credit facility on April 17, 2024, to replace an existing €400 million facility[84]. Dividends - The proposed dividend is €0.164 per share[3]. - The board proposed a final dividend of €419,647,136 for the year ending December 31, 2024, translating to €0.164 per share, compared to €350,558,888 or €0.137 per share in 2023[33]. - The company paid dividends of €350,559 thousand to shareholders, an increase from €281,471 thousand in the previous year[24]. - The record date for the proposed final dividend is April 28, 2025[102]. - The dividend payment date is set for May 19, 2025[102]. Assets and Liabilities - Total assets increased to €8,549,959 thousand in 2024, up from €7,615,051 thousand in 2023, representing a growth of 12.3%[21]. - Total liabilities increased to €4,130,529 thousand in 2024, compared to €3,738,242 thousand in 2023, which is an increase of 10.5%[21]. - Current liabilities rose to €1,683,452 thousand in 2024, compared to €1,450,381 thousand in 2023, representing an increase of 16.1%[21]. - The company's equity attributable to owners increased to €4,399,365 thousand in 2024, up from €3,853,795 thousand in 2023, a growth of 14.2%[22]. - Non-current assets totaled €5,990,551 thousand in 2024, up from €5,452,303 thousand in 2023, indicating an increase of 9.8%[21]. - The company's inventory increased to €866,160,000 in 2024 from €782,978,000 in 2023, a rise of about 10.6%, primarily to support sales growth[37]. Impairment and Provisions - The company reported a net impairment loss of €8.6 million on cash-generating units' right-of-use assets as of December 31, 2024[58]. - Other provisions as of December 31, 2024, amounted to €62.2 million, primarily related to contractual obligations to restore leased commercial properties[65]. - The provision for obsolete and slow-moving inventory increased by €18,500,000 in 2024, totaling €128,822,000[37]. - The impairment loss recognized for property, plant, and equipment totaled €16 million for the year, with €3.2 million specifically attributed to identified impairment signs[45]. Strategic Initiatives - The company is advancing its digital transformation plan to enhance technical capabilities across various activities[15]. - The company remains committed to achieving robust, sustainable growth above market levels despite complex industry conditions[89].

Investment Rating - The report initiates coverage with an "Outperform" rating for Prada, projecting a target price of 81.87 HKD based on a 25X P/E valuation for 2025 [3]. Core Insights - The report highlights the revitalization of the brand and anticipates growth in performance, driven by strategic adjustments and strong brand management [2][3]. Summary by Sections Company Overview - Founded in 1913 in Milan, Prada has undergone significant transformations, including a strategic shift since 2016 that has led to a 113% increase in market value from 2018 to 2024 [3][12]. - The company operates three main brands: Prada, MIU MIU, and Church's, with a focus on leather goods and fashion [12][21]. Industry Position - Prada ranks 8th in revenue among major luxury brands, with a revenue of 4.726 billion euros in 2023, and has shown a compound annual growth rate (CAGR) of 10% in revenue and 27.3% in net profit from 2019 to 2023 [18][21]. - The company's P/E ratio is positioned at 21.5x in 2023, which is lower compared to peers like Hermès and LVMH, indicating potential for valuation improvement [18][19]. Operational Review - The company has successfully implemented a comprehensive strategic transformation since 2016, including streamlining direct stores and enhancing e-commerce channels, resulting in a recovery in revenue and profitability [28][36]. - The introduction of Raf Simons as co-creative director in 2020 has revitalized the Prada brand, leading to increased brand visibility and sales performance [40][41]. Brand Performance - MIU MIU has evolved into a strong independent brand, with significant growth in brand heat and market presence, particularly among younger demographics [40][52]. - The report notes that both Prada and MIU MIU have seen substantial increases in online engagement and brand ranking, indicating a successful repositioning in the luxury market [47][48]. Financial Forecast and Valuation - Projected revenues for Prada are expected to reach 5.444 billion euros in 2024, with net profits forecasted at 824 million euros, reflecting a growth trajectory in the luxury sector [3][36]. - The report emphasizes the resilience of luxury goods, particularly among high-net-worth individuals, suggesting continued demand despite macroeconomic challenges [3][5].