Prada Group’s retail sales returned to last year’s levels in December and the Italian luxury goods firm is generating operating profits again.

The company noted that despite ongoing store closures caused by Covid-19 related lockdowns, which averaged 9 percent of its network during the second half of 2020, it has enjoyed a progressive recovery in revenues, “culminating for the retail sales in a full recovery to 2019 levels in the month of December”.

It added that in the second half of 2020, the impact of the pandemic on its retail channel was limited at an average 6 percent decline at constant currency rates. Europe and Japan were penalized by a dearth of tourists, while the Americas, the Middle East, Russia and, above all, Asia Pacific recorded positive performances, particularly China, up by 52 percent.

Wholesale sales declined in line with Prada’s strategy, which started in 2019, to trim its portfolio to protect the image of its brands. Currently, the retail channel accounts for around 90 percent of the company’s sales.

Prada improved its margins in the second half of the year, offsetting the decline suffered in the first part of the year, and enabling it to finish 2020 with Ebit in “positive territory”. In the first half, Ebit, excluding the operating costs of stores that remained closed due to the lockdowns, was a negative €83 million.

The company also improved its balance sheet thanks to the generation of cash and strict control over investments.

The broker Equita noted that the 6 percent decline in Prada’s second-half retail sales is sharper than its own forecast of a 1 percent drop. For 2021, Equita expects Prada’s revenues to rise by 27 percent. However, it noted that at current share prices, Prada is trading at 58 times its expected earnings for 2022. A level that the broker described as “excessively high.”

Prada, which is traded on the Hong Kong Stock Exchange, closed down by 2.73 percent to 48.05 Hong Kong dollars (€5.05-$6.20) on Jan. 6.