FY 2015 Results Presentation
New York, April 11th 2016

AgendaPresentation
11:00am – 11:45am
Carlo Mazzi - Chairman• 2015 Overview
Alessandra Cozzani - Group CFO• 2015 Financial Review
Stefano Cantino - Group Strategic Marketing Director• Building up a customer centric culture
Q&A Session
11:45am – 12:30pm
Light Lunch
12:30pm – 1:30pm

FY 2015 Results Presentation – April 11th 2016

1

2015 Overview
TURNOVER
Total Revenues to € 3,548 mn in FY-2015, in line with the previous year:• Retail channel (86% on sales) up 3% (-5% at constant FX)• Wholesale channel down 17% (-21% at constant FX) due to persistent rationalization strategy• Royalties up +14%

RETAIL TRENDS
By region:• Positive organic growth in Europe and Japan• Asia Pacific weighed on trends• US weakened in H2
By brands / category:• Prada trend driven by favourable FX• Miu Miu overall positive organically during the period• Church’s over-performed driven by positive SSSG
• Leather goods still underperforming• Double digit organic performance in footwear and resilience in RTW

OPERATING RESULTS
Gross margin strong to 72,4%
EBIT to € 503 mn, 14,2% on Revenues
Net Result to € 331 mn, 9,3% on Revenues

FY 2015 Results Presentation – April 11th 2016

2

2015 Financial Review
Alessandra CozzaniGroup CFO

FY 2015 Results Presentation – April 11th 2016

3

Net Sales by Channel (€ mn) – Full Year
2014

2015

% change
as reported% changesame FX

Retail

2,980.985%

3,059.7

87%

+3%

-5%

Wholesale

532.5

15%

444.6

13%

-17%

-21%

Total

3,513.4

100%

3,504.3

100%

-

-8%

Retail
• +3% reported driven by FX tailwind• -5% at constant exchange rates: negative SSSG in Asia and US, positive in Europe and Japan
Wholesale -17% reported (-21% at constant FX), as a result of:- persistent selective strategy of wholesale partners, notably in Europe- weakness in duty-free channel in Korea mainly due to Mers outburst- High-single-digit positive organic performance in US market in Q4 as a result of a good reception from the S/S 2016 collection

FY 2015 Results Presentation – April 11th 2016

4

Net Sales by Geography (€ mn) – Full Year
Note(*): PRC, HK, Macau
Note(**): Japan and Hawaii

2014

2015

% change
as reported% changesame FX+5%-9%RetailEurope999.6

34%

1,058.6

35%

Americas

391.2

13%

410.8

13%

+6%
+5%

Far East

1,130.2

38%

1,080.0

35%

-4%

-16%

769.7

26%

705.8

23%

-8%

-22%

Japan (**)

364.8

12%

403.7

13%

+11%

+4%

Middle East

92.9

3%

103.5

3%

+12%

-5%

Others

2.2

-

3.1

-

+41%

+42%

Total Retail

2,980.985%

3,059.7

87%

+3%

-5%

Wholesale

532.5

15%

444.6

13%

-17%

-21%

Total Sales

3,513.4

100%

3,504.3

100%

-

-8%

Greater China(*)

Europe – positive organic growth driven by tourism, albeit slowing in Q4 due to terrorists attacks in France
Americas – US underlying trends impacted by strong USD, resulting in less tourism and shift of local consumption in other shopping
destinations; North American customers were broadly flat in the period
Double digit organic growth in Brazil and Mexico in both Q3 and Q4
Asia Pacific – difficulty in most markets, affected by pricing differentials and Chinese stock market volatility; HK and Macau still impacted
by very low footfall
Japan – positive organic growth throughout the year, sustained by tourism, mainly Chinese
Middle East – Dubai suffering from lower tourism; Middle Eastern customers overall largely positive worldwide throughout the year
FY 2015 Results Presentation – April 11th 2016

5

Net Sales by Brand (€ mn) – Full Year
2014

2015

% change
as reported% changesame FX

Prada

2,463.2

83%

2,487.6

81%

+1%

-7%

Miu Miu

455.0

15%

501.7

16%

+10%

+1%

Church’s

49.0

2%

56.2

2%

+15%

+7%

Other

13.8

-

14.2

-

+4%

+2%

Total Retail

2,980.985%

3,059.7

87%

+3%

-5%

Total Wholesale

532.5

15%

444.6

13%

-17%

-21%

Total

3,513.4

100%

3,504.3

100%

-

-8%

Prada
 Positive organic trends in Europe and Japan and weakness in Asia Pacific (mainly in HK and Macau) and US
Miu Miu
 Positive underlying growth sustained particularly by strong performances in Europe, Middle East and Mainland China
Church’s Very good retail performance in the period, benefitting from higher exposure to Europe
 High single digit SSSG in the year

FY 2015 Results Presentation – April 11th 2016

6

Net Sales by Product (€ mn) – Full Year
2014

2015

% change
as reported% changesame FX

Leather Goods

1,965.6

66%

1,919.9

63%

-2%

-10%

Footwear

448.7

15%

537.5

18%

+20%

+11%

Ready to Wear

512.3

17%

541.6

18%

+6%

-3%

Others

54.3

2%

60.7

2%

+12%

+4%

Total Retail

2,980.985%

3,059.7

87%

+3%

-5%

Total Wholesale

532.5

15%

444.6

13%

-17%

-21%

Total

3,513.4

100%

3,504.3

100%

-

-8%

Leather goods business impacted by contrasting trends across regions
 Positive organic growth in Europe and Japan during the period Negative trend in Asia Pacific and US
Continued strength of Footwear across all brands, still growing in Q3 and Q4 after six consecutive quarters of double-digit organic growth
Resilient performance in Ready-to-wear, improving in Q4 as a result of a very good reception from the Prada women F/W collection

FY 2015 Results Presentation – April 11th 20167

Group Profit and Loss – Full Year
€ mn

2015

2014

Net Sales

3.504,398,8%3.513,498,9%Royalties

43,4

1,2%

38,3

1,1%

Net Revenues

3.547,8

100,0%

3.551,7

100,0%

COGS(980,2)27,6%(1.001,1)

28,2%

Gross Margin

2.567,672,4%2.550,6

71,8%

Product Development(134,3)3,8%(132,6)3,7%Advertising & Promotion(191,7)5,4%(170,6)4,8%

Selling(1.517,4)42,8%(1.340,8)

37,8%

G&A

(221,3)6,2%(205,0)

5,8%

EBIT

502,9

14,2%

701,6

19,8%

Net Financial Income (Expenses)(27,5)

0,8%(34,0)

1,0%

Income Taxes(142,0)4,0%(208,5)5,9%Net Income

333,4

9,4%

459,5

12,9%

Minority Income

2,4

0,1%

8,5

0,2%

Group Net income

330,9

9,3%

451,0

12,7%

D&A

299,9

8,5%

252,7

7,1%

EBITDA

802,8

22,6%

954,3

26,9%

FY 2015 Results Presentation – April 11th 2016

8

EBIT Development – Full Year

19.8%

+0,6%

-5.0%

-0,6%

-0.5%

-0.1%

14.2%

2014

GM

Selling

A&P

G&A

P&D

2015

Positive change
Negative change Gross Margin improvement mainly driven by supply chain efficiencies, largely offsetting unfavourable category / geographic mix
 Higher incidence of selling expenses affected by negative SSSG and higher fixed costs, due to retail network expansion
 € 9 mn one-off expenses included in G&A weighed 90 bps dilution on EBIT margin in Q4

FY 2015 Results Presentation – April 11th 20169

Capex (€ mn) – Full Year
Retail capex in 2015 includes 22 net openings, 20 relocations and 11 renovations
2015 Corporate & Industrial capex includes 2 new industrial facilities:• Leather goods factory in Tuscany, Italy• Tannerie Hervy in Limoges, France

450

189

337
162

261
175

2014

FY 2015 Results Presentation – April 11th 2016

Corporate & Industrial
Retail201510

Retail Overview - 618 Dos at January 31st, 2016 (*)
22 Net openings

EUROPE: 167
JAPAN: 74 (+4)
NORTH AMERICA& MEXICO: 106 (+7)

ITALY: 54 (+1)

ASIA (EX-JAPAN): 183 (+8)
MIDDLE EAST: 21 (+4)

SOUTH AMERICA: 11
AFRICA: 2 (-2)(*) including 2 Marchesi shops in Italy
FY 2015 Results Presentation – April 11th 2016

11

Net Financial Position (€ mn)

Positive change
Negative change

300(390)*
(102)

333

(285)
189
NFP
Jan-15

Net
IncomeNet Operating
Working
Capital

D&A

Capex

Dividends

Other
Others

(160)

NFP
NFP
Jan-16(115)* including payment of payables for capex 2014 (headquarter office in Milan)
FY 2015 Results Presentation – April 11th 201612

Strong Balance Sheet (€ mn)
2015

2014

Non-current assets

2,587

2,557

Net operating working capital

665

563

Other current assets / (liabilities), net

26

(222)

Other non-current assets / (liabilities), net

(66)

(69)

Net invested capital

3,212

2,829

Total consolidated shareholders' equity

3,097

3,018

Net financial position (surplus) / deficit

115

(189)

Total

3,212

2,829

FY 2015 Results Presentation – April 11th 201613

Dividend Policy (€ mn)
281

281

281

230

128

2011

2012

2013

2014

2015

Dividend
Payout (in %)

30%

37%

45%

62%

85%

Dividend
Per Shares (in €)

0,05

0,09

0,11

0,11

0,11

FY 2015 Results Presentation – April 11th 201614

Building up a customer centric culture
Stefano CantinoGroup Strategic Marketing Director

FY 2015 Results Presentation – April 11th 201615

Building up a customer centric culture

CHANNELPRODUCTS

LEVERAGING ON OUR BEST IN CLASS
DISTRIBUTION NETWORKMEETING MARKET EXPECTATIONS WHILE
PRESERVING OUR UNIQUE IDENTITY

EXPERIENCECOMMUNICATIONTARGETING A GLOBAL AUDIENCEFY 2015 Results Presentation – April 11th 2016

TAILORED ATTENTION TO CUSTOMEREXPERIENCE BY PROVIDINGOUTSTANDING SERVICES

16

CHANNEL
Leveraging on our best in class distribution network
RETAIL• Retail network optimization- rationalize in store space- selective closures• Store concept evolution at Miu Miu• Continuous research of market opportunities

FY 2015 Results Presentation – April 11th 2016

17

CHANNEL
Leveraging on our best in class distribution network
WHOLESALE• Rationalization strategy nearly completed• Further development of relationships with strategic key accounts• Business agreements with leading e-tailers

FY 2015 Results Presentation – April 11th 2016

18

CHANNEL
Leveraging on our best in class distribution network
LICENSING• Keep growth momentum in eyewear at both
Prada and Miu Miu• Successful launch of the new Miu Miu fragrance

FY 2015 Results Presentation – April 11th 2016

19

CHANNEL
Leveraging on our best in class distribution network
E-COMMERCE• Set in-house operations across all brands to develop CRM and e-shopping experience• Development plan: extend categories and expand in new countries

FY 2015 Results Presentation – April 11th 201620

PRODUCTS
Meeting market expectations while preserving our unique identity• Relentless focus on innovation and quality: leveraging on our design leadership• Optimize the leather goods portfolio: strengthen all strategic prices ranges to cover any customer
expectations• Strong focus on both local customers and tourists:- Merchandising mix differentiation among regions and stores- Price harmonization across countries• Reduce time to market: “see now buy now” special projects• Development of more versatile collections at Miu Miu• New merchandising mix focused on luxury lifestyle aligned with current market expectations

FY 2015 Results Presentation – April 11th 201621

PRODUCTS
Pricing harmonization

Prada Arcade bag
FY 2015 Results Presentation – April 11th 2016

22

PRODUCTS
See now buy now
SEE NOW BUY NOW
February 2016 – An avant-première of the Pionnière and Cahier bags, starred at the Prada F/W 16
fashion show; both models were immediately available, in limited edition, in Milan, Paris, London
and New York Prada stores

FY 2015 Results Presentation – April 11th 201623

COMMUNICATION
Targeting a global audience• Embracing Digital Communication• Innovative communication projects leveraging on new platforms• Revisited communication approach for Miu Miu brand:
new styling for fashion shows and advertising• Fondazione Prada: brand’s “DNA” strong reference to culture

FY 2015 Results Presentation – April 11th 201624

COMMUNICATION
Embracing digital communication
INCREASING FOCUS ON SOCIAL MEDIA AND DIGITAL COMMUNICATION
 In 2015 both Prada and Miu Miu have been active with special projects dedicated to Social Media
achieving remarkable increase in fan base growth and engagement Reached 6.9 mn fans on Instagram in 2015 (+4.3 mn, + 167% growth yoy) Social media projects to be further enhanced in 2016
 Focus on China: Activated social platform Sina Weibo on February 2016

FY 2015 Results Presentation – April 11th 2016

25

COMMUNICATION
Embracing digital communication
INCREASING FOCUS ON SOCIAL MEDIA AND DIGITAL COMMUNICATION On Febuary 2016 Prada came out on top during Milan Fashion Week: it was the most engaging brandon Instagram with 515,000 interactions in one day reaching 7.2 mn followers (source: Blogmeter) Prada was the 5th Instagram profile in terms of increasing traffic among luxury brands in February 2016(source: Stylophane)

FY 2015 Results Presentation – April 11th 2016

26

COMMUNICATION
Embracing digital communication
MIU MIUSIC - THE NEW FASHION APP
Developed by Miu Miu for IOS, Android and Windows devices,
the Miu Miusic app has been launched in February 2016.
The project is aimed to engage Miu Miu and music lovers in an
exclusive experience, allowing users to create their personal
videoclips by combining music tracks and original graphics andshare them on their favourite social media.
Two artistic worlds – the music created exclusively by DJ Frederic
Sanchez and a set of distinctive Miu Miu graphics – are brought
together with unique, highly personal video contents, different
every time.
New releases are planned in 2016 involving new artists andvisuals consistent with the new Miu Miu collections. New features
will include the possibility to shop selected online key items.

FY 2015 Results Presentation – April 11th 201627

COMMUNICATION
Innovative communication projects
THE POSTMAN DREAMS - a humorous series of five shorts captured by Autumn de Wilde, one ofAmerica’s most imaginative filmmakers, starring the Prada Galleria bag, released for one-month period tokeep momentum and expectations high

FY 2015 Results Presentation – April 11th 2016

28

COMMUNICATION
Innovative communication projects
REAL FANTASIES - video created by AMO, the design and research division of the OMA architecture studio,
to present the Prada Men’s and Women’s Collections.
The video provides a graphical reinterpretation of the Indefinite Hangar, the space designed for the
Spring/Summer 2016 fashion shows, where spectators experienced a sensation of continuity between theceiling and floor, thus blurring the boundaries between the catwalk and the public.

FY 2015 Results Presentation – April 11th 2016

29

COMMUNICATION
Innovative communication projects
MIU MIU WOMEN’S TALES - a series of short films created by renowned international contemporary
female directors, inspired by Miu Miu to celebrate and interpret the concept of femininity: an innovative
vision consistent with Miu Miu’s avant-garde identity.

FY 2015 Results Presentation – April 11th 201630

COMMUNICATION
Fondazione Prada
FONDAZIONE PRADA expresses the strong connection between Prada and the world of art and culture.
It contributes to communicate Prada’s essence and the DNA.
More than 3000 free editorials pages in 2015.

FY 2015 Results Presentation – April 11th 201631

EXPERIENCE
Tailored attention to customer experienceby providing outstanding services
One of the key pillars of the Prada Group’s
2016 strategy is the strengthening of ourrelationship with existing and aspirational
clients, including millennials:• An highly innovative “Digital Retail
Project”: a comprehensive view of ourcustomers• One-to-one digital marketing: “Prada
Monkey Chatter”, “Miu Miu Rougeobsession”…
• Tailored services: made-to-order, local
delivering, trunk shows…
• In-store marketing events: private
fashion shows, special events…

FY 2015 Results Presentation – April 11th 2016

32

EXPERIENCE
Digital Retail Projecta comprehensive view of our customers
With the aim to increase retention and loyalty by providing personalized services and tailored product offer
across different client segments and markets, the Group launched the «Digital Retail Project»
The project allows:• Store managers to have full access to relevant information in order to have deeper customer insights anddevelop personalized metrics• Clients to have access to exclusive contents (advertising campaigns, special projects, new productreleases, exclusive fashion show, back stage materials on a one-to-one approach)

FY 2015 Results Presentation – April 11th 2016

33

EXPERIENCE
One-to-one digital marketing
THE MONKEY CHATTER
February 2016 – Launch of an exclusive collection of women’s and men’s bags, footwear, accessories
and iconic trick charms, to honour the Chinese New Year

FY 2015 Results Presentation – April 11th 2016

34

EXPERIENCE
One-to-one digital marketing
ROUGE OBSESSION
Miu Miu capsule collection inspired by its affinity with the astrological sign after which the Chinese New
Year is named

FY 2015 Results Presentation – April 11th 2016

35

EXPERIENCE
Made-to-Order
PRADA: MADE-TO-ORDER DÉCOLLETÉ

FY 2015 Results Presentation – April 11th 2016

36

EXPERIENCE
In-store marketing
RIPPLE EFFECT WALLPAPER
An undulating landscape of color, shadow, curves and geometries that disturbs the planar wall surface

FY 2015 Results Presentation – April 11th 201637

Appendix

APPENDIXFY 2015 Results Presentation – April 11th 2016

38

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

2014

2015

% change
as reported% changesame FX

Retail

809.2

82%

806.3

84%

-

-6%

Wholesale

181.1

18%

149.0

16%

-18%

-21%

Total

990.3

100%

955.3

100%

-4%

-9%

FY 2015 Results Presentation – April 11th 2016

39

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

2014

2015

% change
as reported% changesame FX

RetailEurope

248.6

31%

242.7

30%

-2%

-3%

Americas

120.5

15%

117.0

15%

-3%

-10%

Far East

305.7

38%

295.6

37%

-3%

-10%

203.5

25%

189.4

23%

-7%

-16%

Japan (**)

107.7

13%

120.0

15%

+11%

+2%

Middle East

26.0

3%

30.1

4%

+16%

+3%

Others

0.7

-

0.9

-

+32%

+46%

Total Retail

809.2

82%

806.3

84%

-

-6%

Wholesale

181.1

18%

149.0

16%

-18%

-21%

Total Sales

990.3

100%

955.3

100%

-4%

-9%

Greater China(*)

FY 2015 Results Presentation – April 11th 201640

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

2014

2015

% change
as reported% changesame FX

Prada

663.7

82%

651.1

81%

-2%

-8%

Miu Miu

125.4

15%

133.3

17%

+6%

-

Church’s

15.6

2%

16.9

2%

+8%

+3%

Other

4.5

-

4.9

-

+9%

+8%

Total Retail

809.2

82%

806.3

84%

-

-6%

Total Wholesale

181.1

18%

149.0

16%

-18%

-21%

Total

990.3

100%

955.3

100%

-4%

-9%

FY 2015 Results Presentation – April 11th 201641

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

2014

2015

% change
as reported% changesame FX

Leather Goods

518.9

64%

493.7

61%

-5%

-10%

Footwear

125.5

16%

137.8

17%

+10%

+4%

Ready to Wear

153.1

19%

161.9

20%

+6%

-1%

Others

11.7

1%

12.9

2%

+11%

+8%

Total Retail

809.2

82%

806.3

84%

-

-6%

Total Wholesale

181.1

18%

149.0

16%

-18%

-21%

Total

990.3

100%

955.3

100%

-4%

-9%

FY 2015 Results Presentation – April 11th 201642

Group Net Sales by Region/Channel (€ mn) – Full Year0% as reported / -8% same fx

Middle East
3%

+5%

+4%

-16%

-5%

-21%

+7%

Retail: -5% at constant exchange rate

3,513

FY 2014-9%EuropeAmerica

Japan

3,513

Asia
Pacific

Italy
13%

Asia Pacific35%

Europe22%

3,504

MiddleEast

Wholesale

Fx
ImpactFY 2015

Japan
13%

America
13%

Region breakdown for retail only

Positive change

Negative change

FY 2015 Results Presentation – April 11th 201643

Prada – Total Net Sales by Channel (€ mn) – Full Year-2% as reported / -9% same fx

Middle East
3%

-7%

-23%

Italy
12%

+7%
Asia Pacific
35%

2.841

2.895

Europe
22%

Japan
13%

FY 2014RetailWholesale

Fx
ImpactFY 2015

America
15%

Region breakdown for retail only

Positive change
Negative change

FY 2015 Results Presentation – April 11th 201644

Miu Miu – Total Net Sales by Channel (€ mn) – Full Year
+7% as reported / -1% same fx

Middle East
6%

+1%

-17%

Italy
12%

+8%

519

Europe
18%

527

564

527

Asia Pacific38%

America
9%
Japan
16%

FY 2014RetailWholesale

Fx
ImpactFY 2015
Region breakdown for retail only

Positive change
Negative change

FY 2015 Results Presentation – April 11th 201645

Q&A SESSION