PRADA LOSES BLAKE AND POSTPONES IPO AFTER FLAT RESULTS

Brain Blake, a key executive who joined Prada in October 2007, has left the company for personal reasons. He was chief operating officer and commercial director of the company, as well as a member of its board of directors.

Prada closed its financial year ended last Jan. 31 with sales virtually flat and a drop in gross operating and net profits, largely due to negative currency fluctuations and investments to open directly operated stores (DOS) by 34 units, boosting the tally to 238. The company also put on hold its initial public offering, which was expected to be carried out last year.

Revenues totaled €1.648 billion, down from the €1.661 billion a year earlier. But on a comparable currency and size basis, sales were up by 0.2 percent.

Sales generated by DOS totaled €871.3 million, up 5.6 percent based on comparable structures and currency levels. The share of DOS on overall sales rose to 54.2 percent from 51.6 percent. The wholesale channel represented sales of €737.5 million, down by 4.7 percent at similar size and currency rates. The drop stems from a selection in wholesale clients and a decline in U.S. demand.

Royalties totaled about €39.5 million, down 15 percent from a year earlier due to the end of the sales campaign for the Prada mobile phone produced by the South Korean manufacturer LG.Operating earnings before amortization and depreciation (Ebitda) slipped to €282.2 million from €316.0 million.

Investments of €158.7 million were largely made for the expansion of the retail network. During the financial year, Prada opened 18 new Prada shops, nine Miu Mius and seven Church stores. Prada’s chief executive, Patrizio Bertelli, said the investment plan was the most important one carried out by the company and will enable it to be stronger to seize market opportunities when the economy picks up.

Bertelli indicated that growth in the Far East, which now represents 35 percent of Prada’s sales, offset the decline in the U.S., where department stores are having difficulties. Prada ruled out the possibility of cutting prices to tackle the current economic slowdown but will give more importance to entry-price products.

The company had net debt of €537.4 million at the end of January, up from €507.5 million a year earlier. Bertelli also said that management of the group’s debt is not an issue and that the group continues to invest to build up its presence in Asia. The combined debt of Prada and of its parent company, Prada Holding, is estimated at around €1.2 billion.

He added that the group is currently not interested in going public. The group’s stock market listing has been postponed due to the turmoil on the financial markets.