- Prada Group reported an 18% jump in sales in Q3.
- This was largely due to the success of its sister brand, Miu Miu.
- The brand has become popular with Gen Z shoppers and young celebrities.
Prada Group is defying the luxury slowdown thanks to its Miu Miu brand.
While its peers like LVMH and Kering reported weak Q3 results, driven in no small part by slumping demand in China, Prada is joining Hermès as one of the few luxury houses to be thriving right now.
Retail sales across the Italian fashion group grew 18% in the most recent quarter. Sales were up 2% at its namesake brand but it was Miu Miu that stole the show — reporting a 105% increase in sales in Q3 versus the year before.
The more youthful and affordable sister brand of Prada was founded by Miuccia Prada, the granddaughter of the group's founder, in 1992.
Its recent success can be partly credited to its burgeoning Gen Z fan base and the cult following behind products like its micro-skirt, which went viral after debuting in 2021 and was worn by Emily Ratajkowski, Hunter Schafer, and Hailey Bieber.
Blanca Zugaza Escribano, a fashion and luxury consultant at Metyis, told BI that Miu Miu is a prime example of a luxury brand that already has its finger on the pulse of what excites Gen Z — a consumer base that is becoming increasingly important for luxury brands to appeal to.
But the brand's success seems to have even taken company execs by surprise.
"I would lie if we said that we would have predicted to double our business year on year," Andrea Guerra, CEO of Prada, said during a call with investors on Wednesday.
Things are going so well that analysts were told Prada plans to increase the size of Miu Miu stores and open up new ones in some regions where it doesn't have a presence.
Prada Group's CFO Andrea Bonini said Miu Miu's performance has benefited Prada, boosting profit margins and enabling the company to invest more in its Prada brand.
"Likewise, Miu Miu would probably not be experiencing this type of growth today if it hadn't been part of a larger group," Bonini added.
In a note to clients on Wednesday, Bernstein analyst Luca Solca said that the brand's current trajectory "confirms our view that the market is underappreciating the growth that Miu Miu can generate in the next 12 to 18 months."
"At the same time, it also confirms our worry that Prada — which is still the very bulk of the business — could be well past its peak growth potential," he added.