PRADA(HK:01913)2021-04-26 09:31Financial Performance - Prada Group reported a significant decline in revenue for 2020, with total sales dropping by 24% to €2.42 billion compared to the previous year[1]. - The group's net profit for 2020 was €200 million, a decrease of 70% year-on-year, reflecting the impact of the COVID-19 pandemic on luxury retail[1]. - Net sales for the year ended December 31, 2020, were €2,390.9 million, a decrease from €3,183.3 million in 2019, representing a decline of 25.0%[70]. - EBIT for the year was €20.1 million, significantly down from €306.8 million in 2019, resulting in an EBIT margin of 0.8% compared to 9.5% the previous year[71]. - The net loss for the group was €54.1 million, compared to a profit of €255.8 million in 2019, marking a substantial decline[71]. - Operating cash flow for the year was €262.1 million, down from €362.4 million in 2019, indicating a decrease in cash generation from operations[71]. - The group’s equity attributable to shareholders was €2,832.1 million, down from €2,967.2 million in 2019, showing a decline in shareholder equity[72]. - The company incurred €115.8 million in costs related to store closures during lockdowns, impacting overall financial performance[70]. - The net financial position showed a loss of €311.4 million, an improvement from a loss of €405.5 million in 2019, indicating better financial management[72]. - Total operating expenses amounted to €1,723.3 million, a decrease of €289.5 million compared to the previous year, largely due to rent reductions and government subsidies[84]. E-commerce and Digital Strategy - E-commerce sales surged by 77% in 2020, accounting for 20% of total sales, indicating a shift in consumer purchasing behavior towards online platforms[1]. - The company has implemented new digital marketing strategies to enhance customer engagement and drive sales through online channels[1]. - Significant investments have been made in digital development, strengthening partnerships with top online retailers[42]. - Direct e-commerce sales tripled compared to 2019, indicating a strong shift towards online shopping during the pandemic[79]. - The company redesigned prada.com and miumiu.com for enhanced customer experience[75]. Market Expansion and Retail Strategy - Prada Group plans to expand its retail network, with a focus on opening new stores in key markets, particularly in Asia and the Americas, to enhance brand presence[1]. - The company has expanded its distribution network to 633 directly operated stores in prime locations, enhancing brand visibility and sales performance[42]. - The company closed 20 stores and opened 12, resulting in a total of 633 stores as of December 31, 2020, with 140 stores still closed due to the pandemic[79]. - Retail channel sales accounted for 88.5% of total net sales in 2020, up from 82.8% in 2019[79]. - The Asia-Pacific market showed resilience with retail sales net amounting to a decrease of only 1.1% compared to 2019, while the second half of 2020 saw a 19% increase compared to the same period in 2019[80]. Sustainability and Corporate Responsibility - The company is investing in sustainable production practices, with plans to open a new leather goods factory in Tuscany and refurbish five existing facilities to meet environmental standards[1]. - Prada Group's energy efficiency action plan includes the construction of 10 large photovoltaic power stations and the replacement of all air conditioning and cooling systems with the latest technology[48]. - The company has committed to a fur-free policy and launched the Prada Re-Nylon initiative, aiming to replace virgin nylon with recycled nylon across most of its clothing and leather goods[51]. - Prada Group achieved 58 LEED certifications for its stores and factories by December 31, 2020, with 20 new certifications added in 2020[48]. - The company participated in the Fashion Pact, collaborating with over 60 leading fashion and textile companies to enhance environmental sustainability commitments[51]. Innovation and Product Development - Prada Group is set to launch new product lines, including a collection of sustainable fashion items, to align with growing consumer demand for eco-friendly products[1]. - The company continues to focus on innovation in design and technology, with ongoing research and development efforts to create unique luxury products[1]. - Research and development costs for design and product development amounted to €102.2 million for the year[110]. Leadership and Governance - Miuccia Prada and Patrizio Bertelli are co-founders and current CEOs of the company, with Miuccia serving as the chairperson since November 2003[114]. - The company has a strong governance structure with various committees, including audit and remuneration committees[118]. - The board includes members with significant expertise in international tax, private equity, and mergers and acquisitions[116]. - The company has maintained a consistent leadership team with re-elections occurring in 2018 for key positions[114][116]. - The management team has extensive experience in luxury retail and brand management, enhancing the company's operational capabilities[126]. Employee and Workforce Management - As of December 31, 2020, Prada Group employed 12,858 people from 104 countries, with women making up 62% of the workforce[45]. - The average number of employees decreased to 13,331 from 13,779 in the previous year, reflecting a reduction in workforce[71]. - The company emphasizes diversity and inclusion, establishing a cultural diversity advisory committee in 2019 to enhance management's focus on social sustainability[45]. - Prada Academy serves as the training center to cultivate talent and ensure the preservation of craftsmanship knowledge and skills[46]. Financial Management and Risk - The company has established a tax risk management system, participating in the OECD's International Compliance Assurance Program (ICAP) to mitigate potential tax risks[102]. - The group has achieved "Authorized Economic Operator" (AEO) status, enhancing operational efficiency and reducing average transfer times for raw materials and finished goods[103]. - The company has implemented measures to protect data privacy and ensure compliance with applicable laws and regulations, minimizing data processing risks[104]. - The group actively protects its brand and intellectual property through legal registrations and collaborations with customs and law enforcement agencies[97]. - The company has established a systematic communication channel with tax authorities to reduce uncertainties related to tax compliance[102].