Investor & Analyst Day
London, March 30th, 2015

Agenda10:00am-10:45am
Presentation
10:45am-11:30am
Q&A Session
11:30am-01:30pm
Transfer from London to Northampton
01:30pm-02:30pm
Light lunch in Church’s office
02:30pm-04:30pm
Visit around Church’s Factory
04:30pm-06:30pm
Transfer from Northampton to London

Investor & Analyst Day - March 30th, 20151

Speakers and contents
 Carlo Mazzi - Chairman– 2014: a year of transition on our growth journey Donatello Galli - CFO– 2014 Financial Review

 Stefano Cantino - Communication and Marketing Director– Driving stable and profitable growth Carlo Mazzi - Chairman– Outlook

Investor & Analyst Day - March 30th, 2015

22014: a year of transition on our growth journey
Carlo Mazzi
ChairmanInvestor & Analyst Day - March 30th, 2015

3

The Group has more than doubled its sizein the last five years, reaching a strong position at the topof the luxury industry
3,552
Royalties, 38

Revenues
EBIT
Net Result

Retail2.981

1,561Royalties, 31
Retail991

702
451

Wholesale
539

187

103

12%

7%

FY 2009

DOS 265
in 36 country

Investor & Analyst Day - March 30th, 2015Wholesale
533

20%

13%

FY 2014

DOS 594
in 55 country4Well-balanced retail footprint combined with aprominent presence in all product categories
give the Group a resilient profile
Net Sales By Region

Net Sales By Product

3%

2%
18%
16%

56

108
553

36%

645

21%

1,253

595

2,218

739

17%
368

492

63%

10%
14%
Italy

EuropeLeather Goods

Ready to Wear

AmericaJapanFootwear

OtherAsia PacificMiddle East and RoW

Investor & Analyst Day - March 30th, 20155

2014: a year of transition
 2014 was meant as a year to consolidate the Group position and results while pursuing our long term
growth strategy
 Macroeconomic environment was more challenging than expected The luxury consumptions have been affected by a general economic slowdown and the spending
patterns of Chinese customers have been influenced by “anti-extravagance campaign”
 The rising competition has increased customers’ choices, making them more demanding andsomehow reducing brand loyalty, especially in the Leather Goods segment
 The challenge of meeting customers' needs is growing, due to the ongoing change of new
generations’ habits and culture…
Investor & Analyst Day - March 30th, 20156

We have been focusing on three main areas, with the aimof matching the increasing market's complexity
ORGANIZATIONPRODUCTS

DISTRIBUTION
15%5612645

411

2009

712

595

35%

2,218396

2014

2009

2014
65%
85%

Leather Goods
FootwearInvestor & Analyst Day - March 30th, 2015

Ready to Wear
OtherRetailWholesale7

2014 Financial Review
Donatello Galli
Group CFO

Investor & Analyst Day - March 30th, 2015

8

Net Sales by Channel (€ mn) – Full Year

Retail2013

Mix%

2014

Mix%% ch.

% ch.

as reported

same FX2,996.6

84%2,980.985%-1%-551.6

16%

532.5

15%

-3%

-5%

3,548.2100%

3,513.4

100%

-1%

-1%

Wholesale

Total

 Retail–Flat at constant exchange rates:
 54 net openings since February 1st , 2014 (32 Prada, 19 Miu Miu, 3 Church’s) SSSG high single-digit negative in the period Wholesale–

In line with guidance and our Group’s strategy to increase control over distribution
 Negative trend in Europe due to persistent selective strategy
 Americas recorded a negative trend mainly following the conversion of 14 corners in US and Canada(on top of 21 in 2013)
 Strong double digit increase in Far East (mainly DFS in Korea)

Investor & Analyst Day - March 30th, 2015

9

Net Sales by Channel (€ mn) – 4th Quarter

2013

Mix%

2014

Mix%% ch.

% ch.

as reported

same FX

Retail

814.6

81%

809.2

82%

-1%-5%

Wholesale

186.4

19%

181.1

18%

-3%-6%

1,001.0

100%

990.3

100%

-1%-5%Total

 Retail marginally improved at constant exchange rate despite the adverse timing of the Chinese New Year (*)
 Wholesale trend impacted by 4 conversions in US and Canada and continuing selective strategy in Europe(*) 19 February in 2015, captured in Q1 201531 January in 2014, captured in Q4 2013
Investor & Analyst Day - March 30th, 2015

10

Net Sales by Geography (€ mn) – Full Year
2013

Mix%

2014

Mix%

RetailEurope1,012.0

34%

999.6

34%

Americas

363.3

12%

391.2

Far East

1,195.7

40%

823.2

Japan (**)

% ch.

% ch.

as reported

same FX

13%

-1%
+8%

-1%
+7%

1,130.2

38%

-5%

-7%

27%

769.7

26%

-7%

-8%

338.7

11%

364.8

12%

+8%

+13%Middle East

84.5

3%

92.9

3%+10%+9%

Others

2.5-2.2--10%-11%

Total Retail

2,996.6

84%

2,980.985%-1%-Wholesale

551.6

16%

532.5

15%

-3%-5%

Total Sales

3,548.2100%

3,513.4

100%

-1%

-1%

Note(*): PRC, HK, Macau
Note(**): Japan and Hawaii

Greater China(*)

 Europe: impacted by the lack of touristic flow and weak domestic demand, especially in the first 9-months
 Americas: good trend fuelled by domestic consumption, also considering the tough comparison base (+36% in FY-2013) Far East: negatively impacted primarily by HK and Macau where market conditions deteriorated significantly during thesecond half Japan: strong performance across the quarters driven by robust local demand and increasing touristic flow
 Middle East: good performance affected by a slowing down of tourism in the second part of the year

Investor & Analyst Day - March 30th, 201511

Net Sales by Geography (€ mn) – 4th Quarter
Note(*): PRC, HK, Macau
Note(**): Japan and Hawaii

2013

Mix%

2014

Mix%% ch.

% ch.

as reportedsame FX

RetailEurope247.530%

248.6

31%

-Americas

108.0

13%

120.5

15%+12%+1%+3%

Far East

334.3

41%

305.7

38%

-9%

-16%

232.6

29%

203.5

25%

-13%

-21%

Japan (**)

100.5

12%

107.7

13%

+7%

+9%

Middle East

23.6

3%

26.0

3%

+10%

-Others

0.7-

0.7--2%-4%

Total Retail

814.6

81%

809.2

82%

-1%

-5%

Wholesale

186.4

19%

181.1

18%

-3%

-6%

Total Sales

1,001.0

100%

990.3

100%

-1%

-5%

Greater China(*)

 Europe turned positive supported by improving local demand and touristic flow Americas improved, thanks to local consumption
 Far East weakened, particularly impacted by the different timing of the CNY affecting the performance of January throughout
the Greater China
 Japan accelerated sustained by local demand and strong touristic flow
 Middle East was broadly flat impacted by a slump in the touristic flow (mainly Russians)
Investor & Analyst Day - March 30th, 2015

12

Net Sales by Brand (€ mn) – Full Year
2013

Mix%

2014

Mix%

% ch.

% ch.

as reported

same FX

Prada

2,505.5

84%

2,463.2

83%-2%-2%Miu Miu

437.5

15%

455.0

15%+4%+4%

Church’s

42.71%

49.0

2%+15%+12%

Car Shoe

7.5-8.4-+12%+11%

Other

3.4-

5.3

-+57%

+57%

2,996.6

84%

2,980.9

85%

-1%

-

551.6

16%

532.5

15%

-3%

-5%

3,548.2100%

3,513.4

100%

-1%

-1%

Total Retail
Total Wholesale
TotalPrada Far East showed a deterioration trend in 2H, largely due to tough trading conditions in HK and Macau and different calendar ofthe CNY
 Double-digit organic performance in men’s division sustained particularly by mature markets and Middle EastMiu Miu
 Strong double digit organic growth in US, Middle East and Mainland China / mixed performance in Europe and good in Japan
 Slowdown in HK and Macau towards year-end
Church’s and Car Shoe
 Double digit organic growth, showing an acceleration trend in the last quarter

Investor & Analyst Day - March 30th, 201513

Net Sales by Brand (€ mn) – 4th Quarter
2013

Mix%

2014

Mix%% ch.

% ch.

as reported

same FX

Prada

678.8

83%

663.7

82%

-2%-6%Miu Miu

120.2

15%

125.4

15%

+4%-

Church’s

13.2

2%

15.6

2%+18%+14%

Car Shoe

1.4-

1.9-+32%

+26%

Other

0.9-

2.6-+198%+198%

Total Retail

814.6

81%

809.2

82%

-1%

-5%

Total Wholesale

186.4

19%

181.1

18%

-3%

-6%

1,001.0

100%

990.3

100%

-1%

-5%

Total

Investor & Analyst Day - March 30th, 201514

Net Sales by Product (€ mn) – Full Year
2013

Mix%

2014

Mix%% ch.

% ch.

as reported

same FX

2,090.570%

1,965.6

66%

-6%

-6%

Footwear

376.7

13%

448.7

15%

+19%

+19%

Ready to Wear490.6

16%

512.3

17%

+4%

+5%

Others

38.8

1%

54.3

2%

+40%

+40%

2,996.6

84%

2,980.985%-1%-551.6

16%

532.5

15%

-3%

-5%

3,548.2100%

3,513.4

100%

-1%

-1%

Leather Goods

Total Retail
Total Wholesale
Total Leather goods negatively impacted by tougher market conditions in Asia and lack of touristic flow in Europe / Solid trend inJapan and US across the year Excellent performance of footwear across all regions and brands and sustained along all quarters
 Positive trend of RTW at Prada and Miu Miu, notably in mature markets, slowing towards 2H and primarily impacted by Far
East Double-digit organic increase in Men’s business fuelled particularly by footwear and RTW

Investor & Analyst Day - March 30th, 201515

Net Sales by Product (€ mn) – 4th Quarter
2013

Mix%

2014

Mix%% ch.

% ch.

as reported

same FX

Leather Goods

544.7

67%

518.9

64%

-5%

-9%

Footwear

104.9

13%

125.5

16%

+20%

+15%

Ready to Wear

156.4

19%

153.1

19%

-2%

-5%

8.5

1%

11.7

1%

+37%

+29%

Total Retail

814.6

81%

809.2

82%

-1%-5%

Total Wholesale

186.4

19%

181.1

18%

-3%-6%

1,001.0

100%

990.3

100%

-1%

-5%

Others

Total

Investor & Analyst Day - March 30th, 201516

Group Profit and Loss – Full Year€ mn2014%

3.513,438,33.551,7(1.001,1)
2.550,6(132,6)(170,6)(1.340,8)(205,0)
701,6

98,9%
1,1%
100,0%
28,2%
71,8%
3,7%
4,8%
37,8%
5,8%
19,8%

Net Financial Income/(Expenses)(34,0)

Income Taxes
Minority Income2014 vs 2013

2013

%

3.548,239,1
3.587,3(938,7)2.648,6(129,8)(172,0)(1.212,1)(195,6)
939,2

98,9%
1,1%
100,0%
26,2%
73,8%
3,6%
4,8%
33,8%
5,5%
26,2%

1,0%

(16,3)

0,5%(208,0)
(8,5)

5,9%
0,2%

(285,1)(10,0)

7,9%
0,3%Group Net income

451,0

12,7%

-28,2%

627,8

17,5%

D&A
EBITDA

252,7
954,3

7,1%
26,9%

-16,5%

203,9
1.143,2

5,7%
31,9%

Net Sales
Royalties
Net Revenues
COGS
Gross Profit
Product Development
Advertising & Promotion
Selling
G&AEBIT

Investor & Analyst Day - March 30th, 2015

-1,0%
-3,7%

-25,3%17

EBIT Development – Full Year

26.2%

-2.0%

-4.0%

+0.0%

-0.2%

-0.2%

19.8%

2013

GMSelling

A&P

G&AOther2014

 Foreign exchange rates negatively impacted EBIT margin by  60 bps

 Gross Margin dilution mainly due to foreign exchange rates and less favourable category / geographical mix

Investor & Analyst Day - March 30th, 201518

Capex (€ mn) – Full Year
611

89
450

189

522

261
Corporate & Industrial
Retail20132014

 2014 Capex driven by Retail development (64 gross new openings, 28 relocations and 9 renovations) 2014 Corporate & Industrial includes:–€ 64 million for the purchase of the headquarters office in Milan–€ 60 million for production and logistics

 2013 Retail includes € 182 million for the acquisition of a store located in London (Old Bond Street acquisition)
Investor & Analyst Day - March 30th, 201519

Retail Overview - 594 DOS at January 31st, 2015
64 openings and 10 closings

EUROPE: 167 (+17)

NORTH AMERICA& MEXICO: 99 (+18)

AFRICA: 4 (+1)

SOUTH AMERICA: 11(+1)

Investor & Analyst Day - March 30th, 2015

JAPAN: 70 (-2)

ITALY: 51(+0)

ASIA (EX-JAPAN): 175 (+18)

MIDDLE EAST: 17 (+1)

20Net Financial Position (€ mn)
 Change in Net financial position

(154)

253

(424)

459

(291)
296

NFP
Jan-14

Net
IncomeNet Operating
Working
CapitalD&ACapex

Dividends

49

189

OthersNFP
Jan-15

Positive change
Negative change
Investor & Analyst Day - March 30th, 201521

Dividend policy (€mn)
281

281

230

128

Dividend Payout(in %)
Dividend
Per Shares (in €)20112012

2013

2014

30%

37%

45%

62%

0,05

0,09

0,110,11Investor & Analyst Day - March 30th, 201522

Strong Balance Sheet (€mn)
 … allow as to keep investing and paying significant dividends in a challenging market conditions

67%

28%

5%

Non Current
Assets2,839

Current Assets
1,191

72%

Non Current
Liabilities, 351

20%

Current Liabilities
849

8%

NFP, 189

31-gen-15
Investor & Analyst Day - March 30th, 2015

Equity3,018

January 31st, 2015

01-feb-15
23

Driving stable and profitable growth
Stefano CantinoGroup Communication and Marketing Director

Investor & Analyst Day - March 30th, 201524

Driving stable and profitable growth

RELENTLESS FOCUS ON
PRODUCT EXCELLENCEBOOSTSTORE PERFORMANCESELECTIVE RETAILDEVELOPMENT

SUPPORT THE GROWTH THROUGHAN INNOVATIVE AND HIGHLY
RECOGNIZABLE COMMUNICATION

Investor & Analyst Day - March 30th, 201525

Relentless focus on product excellence:
nurturing our innovation skills
 At the forefront of the industry, Prada has always been universally recognised as a leader indesign and style: its ability to interpret, anticipate, and often drive trends remains unchanged Prada’s creative energy also stems from the careful observation in diverse realms: art, architecture,technology, as well as cinema and literature form part of our corporate culture and DNA

Investor & Analyst Day - March 30th, 201526

Relentless focus on product excellence:
quality and innovation to preserve our competitive edge
Perpetuate the Quality of our products by Investing in the value chain through our own manufacturing facilities and possible up-stream vertical integrations
 Preserving Prada’s centennial know-how and craftsmanship of our products

TO BOOST PRADA’S ABILITY TO REACT QUICKLY IN AN INCREASINGLY COMPETITIVE LUXURY MARKET

Investor & Analyst Day - March 30th, 201527

Boost Store Performance:
fuel organic growth
Building up a customer-centric culture Meet expectations of consolidated customers and reinforce loyalty– Scale up in-store marketing retail events to reinforce local customers relations– Integrated on-line and off-line CRM activities Satisfy aspirations of the new fashion-conscious customers– New age categories– New markets– Digital natives

Investor & Analyst Day - March 30th, 201528

Boost Store Performance:
fuel organic growth
Merchandising Mix: modernity by blending heritage and innovation
 Perpetuate a leading position through a well-balanced product portfolio among and inside all categories
 Relentless commitment to innovate while preserving our centennial history Optimize the merchandising mix in an increasingly busy leather goods market: new products covering all strategic
price ranges, supported by marketing and communication activities

Investor & Analyst Day - March 30th, 201529

Selective Retail Development
 Focus on high potential markets to unlock future growth opportunities

 FY 2015:  30 openings
 Improve economics of non-performing stores

Investor & Analyst Day - March 30th, 201530

Support the Growth through an innovative and highly
recognizable communication
THE ENCOUNTER BETWEEN FASHION AND OTHER WORLDS Interaction with contemporary culture in its different fields has always been a source of inspiration forour creativity
 Fashion shows: presented in stages created in co-operation with architects and artists, our shows
are designed to convey the spirit of the collections
 Iconic advertising campaigns where communication consistently interacts with design and retail Events and Special Projects stand out for their total innovative and avant-garde concept.
They enhance brands’ aura, positioning and desirability

Investor & Analyst Day - March 30th, 201531

Support the Growth through an innovative and highly
recognizable communication
 Iconic events: Pradasphere

Investor & Analyst Day - March 30th, 201532

Support the Growth through an innovative and highly
recognizable communication
 Iconic events: Iconoclasts - Paris

Investor & Analyst Day - March 30th, 201533

Support the Growth through an innovative and highly
recognizable communication
 Iconic events: Miu Miu Aoyama - Opening and Fashion Show

Investor & Analyst Day - March 30th, 201534

Support the Growth through an innovative and highly
recognizable communication
 Special Projects: Prada Journal

Investor & Analyst Day - March 30th, 201535

Support the Growth through an innovative and highly
recognizable communication
 Special Projects: Miu Miu Women’s Tales

Investor & Analyst Day - March 30th, 201536

Support the Growth through an innovative and highly
recognizable communication
 Fondazione Prada expresses the strong connection between Prada and the world of art and culture.
It contributes to communicate the essence of our brand globally

Investor & Analyst Day - March 30th, 201537

OutlookCarlo Mazzi
ChairmanInvestor & Analyst Day - March 30th, 201538

OutlookEXTERNAL ENVIRONMENT Geo- political and macroeconomic environment still uncertain Weaker Euro supporting sales
 Trading conditions in Hong Kong and Macau remain unsettled

LUXURY MARKET Beyond cycles, the luxury market is still a structurally growing sector where Prada is positioned
firmly at the top Increasing competition combined with a more diversified and sophisticated customer, require
today more than ever the ability to be responsive in the short term, while investing for the longterm

2015 ACTION PLAN


Strong focus on organic growth
Continue to increase store productivity
Industrial investments to protect our competitive edge
Selective retail expansion
Rigorous costs management
Reinforcing organization and processes

2015 OUTLOOK

30 net openings
Flat SSSG progressively improving from negative territory during the year
Further wholesale rationalization
Exchange rates from headwind to tailwind
Stabilization of margins

Investor & Analyst Day - March 30th, 201539

Appendix

APPENDIX

Investor & Analyst Day - March 30th, 201540

Group Net Sales by Region/channel (€ mn) – Full Year
-1% as reported / -1% same fx

-1%

3,548

FY 2013

+7%

+13%

-7%

+8%-5%+0%

Retail: Flat at constant exchange rateEuropeAmerica

JapanAsia
PacificMiddle
East
3%

3,513

MiddleEast

Wholesale

Fx
Impact

Italy
12%

Asia
Pacific38%

Europe22%

FY 2014
Japan12%

America13%

Positive change
Negative change

Investor & Analyst Day - March 30th, 2015

Region breakdown for retail only41Prada – Total Net Sales by channel (€ mn) – Full Year-2% as reported / -2% same fx

Middle East
3%

Italy
15%

Asia Pacific
36%

2,944

-2%

-3%+0%

2,895
Europe21%

FY 2013RetailWholesale

Fx
ImpactFY 2014

Japan10%

America
15%

Positive change
Negative change

Investor & Analyst Day - March 30th, 201542Miu Miu – Total Net Sales by channel (€ mn) – Full Year
+1% as reported / +2% same fx

Middle East
4%

519

+4%

-13%-0%527
Asia Pacific38%

FY 2013RetailWholesale

Fx
ImpactItaly
15%

FY 2014Europe18%

America
10%
Japan
14%

Positive change
Negative change

Investor & Analyst Day - March 30th, 201543