H1 2018 Results Presentation
Milan, August 1st, 2018

H1 2018 Financial Review

H1 2018 Results Presentation – August 1st 2018

1H1-2018: at a glance
Solid performance – revenue growth and margin progression
Condensed P&L

€m

H1 18

H1 17 (*)% change

Net Revenues

1,535.3

1,486.0+3.3%

Gross Margin

72.0%

72.5%

EBITDA

270.8

250.6

EBITDA Margin

17.6%

16.9%

EBIT

159.2

137.2

EBIT Margin

10.4%

9.2%

Net Income

105.7

95.4

Net Income margin

6.9%

6.4%

+8.0%

+16.0%+10.7%• Net Revenues up +9% at constant FX• EBIT up +16% and EBITDA up +8% leveraging positive SSSG
• Operating costs well under control despite continuing investment in digital and communication(*) Pro-forma 6 months January – June 17 unaudited
H1 2018 Results Presentation – August 1st 20182

H1-2018: at a glanceSound financial structure
Condensed Balance Sheet and Cash Flow€m

30 June 1831 Dec 17

Non current assets

2,569

2,565

Net operating working capital

602

546

Other current assets / (liabilities), net

(31)

(21)

Other non current assets / (liabilities), net

(106)

(121)

Net invested capital3,034

2,970

Consolidated shareholders’ equity

2,794

2,866

Net financial position (surplus)/deficit

240

104

Equity + Net Financial Position

3,034

2,970

Operating cash flow180

447 (*)

Capital expenditure126

251 (*)(*) 11 months

•
•
•
•

Investments of the period fully covered by the operating cash flow
Increase in working capital in line with merchandising strategy
Net financial position reflects €186m dividend payment
Balance sheet remains strong, with very low gearing ratio at 9%

H1 2018 Results Presentation – August 1st 2018

3Net sales by channel
Consisted performance across all channels€mH1 2018

H1 2017% changesame FX

Retail

1,237

1,200+10%

Wholesale274260+8%

H1 18 split
18%

82%

Total

1,511

1,460+9%
RetailWholesale

Retail• Continuing improvement driven by same store sales growth and full-price sales• Strong double digit online sales growth• Ongoing strategic reduction of markdown sales representing now around 10% of retail sales• 4 net store openings (+17 openings -13 closures) consistent with the retail network optimization
Wholesale• Solid results mainly driven by e-tailers
H1 2018 Results Presentation – August 1st 20184

Net sales by geography
Positive trends across all regions; outstanding Asia Pacific growth
H1 2018

H1 2017% changesame FXEurope563

536+7%

Asia Pacific520

488+14%

Greater China

344

316

+17%

Americas204

212+8%

Japan

171

171

+9%

Middle East

5152+7%

Other

2

1+4%

Total

1,511

1,460+9%€m

H1 2018

3%

37%

34%

11%

EuropeAsia Pacific14%
Americas
America
Middle East

JapanOtherEurope• Positive trends despite weaker tourist flow on strength of Euro
Asia Pacific• Double digit organic growth driven by remarkable results in Greater ChinaAmericas• Solid trends fostered by both distribution channels, with particularly strength in retailJapan• Strong recovery in Japan benefited from higher tourist flows and domestic spending
Middle East
• Return to positive retail trends with good results in all countries
H1 2018 Results Presentation – August 1st 2018

5

Net sales by productNew launches deliver growth across all categories€m

H1 2018

H1 2017% changesame FX

H1 2018
2%
21%

Leather Goods

859

839+8%

Ready to Wear

315

278

+20%

Footwear

308

313

+4%

Other2929+2%

Total

1,511

1,460+9%57%

20%

Leather Goods

Footwear

Ready to Wear

OthersLeather Goods• Consistent revenue growth across both Prada and Miu Miu• Newly launched and iconic handbags, including Prada Black Nylon performed particularly well
Ready to wear
• Strong acceleration in both men’s and women’s collections
Footwear• Successful launch of sneakers and lifestyle propositions for both men and women
H1 2018 Results Presentation – August 1st 2018

6

Net sales by brandCreativity driving growth at both Prada and Miu Miu
1%€mH1 2018

H1 2017% changesame FXH1 2018
2%16%

Prada

1,237

1,189+10%

Miu Miu

235230+8%

Church’s

3234-4%

Other

88+2%

Total

1,511

1,460+9%

82%

Prada

Miu Miu

Church’s

OtherPrada• Double digit organic growth driven by all categories. Particularly strength in RTW and Leather Goods
Miu Miu• Return to positive organic growth across all categories through enhanced distribution and new collections
Church’s• Wholesale reorganisation temporarily offsetting positive retail trends

H1 2018 Results Presentation – August 1st 20187Gross margin development
FX headwinds impacted profitability72.5%

H1 2017

+0.2%

-0.7%

Full priceForex and other

72.0%

H1 2018• Margin supported by higher sales quality and reduction in markdowns• Negatively impacted by FX

H1 2018 Results Presentation – August 1st 20188

Operating costs
Investing in the brand within a streamlined cost structure
Operating expenses (€m)
+0.6%
+6941

947

94

95

66
89

65692

692

16
H1 17

H118
17
H1-1

+1947

G&A

H1 18941

94

Selling

Advertising & Promotion

Product Development

G&A

H1 17Selling

A&P

Positive Change

PDNegative Change• Operating expenses broadly in line year-on-year at current exchange rate
• Mid-single digit growth at constant FX driven mainly by increased advertising and digital media spending
H1 2018 Results Presentation – August 1st 20189

CapexInvestments to support long term growth

Capex (€m)

126(*) Feb-July 17

106
52
42
Corporate&Industrial
Retail64

H1-2017 (*)•

4 net openings in H1-2018 - 17 openings and 13 closures•~30 renovation and relocation projects•

Industrial project: new Prada logistic hub in Tuscany

H1 2018 Results Presentation – August 1st 2018

74

H1-2018

10

Net financial position(€m)

(56)

105

112

(139)

(104)
(240)
(186)

NFP
Jan-16(111)
NFP
Jan-1728
Net Income

Net Operating
Working Capital

D&ACapexDividends

Other

NFP
June-18

Positive Change
Negative Change

H1 2018 Results Presentation – August 1st 201811

Business Update

H1 2018 Results Presentation – August 1st 201812

Brand integrity and digital evolution
driving sustainable organic growth

CHANNELSMERCHANDISINGCOMMUNICATION- Enhanced focus on consumer
experience- Balanced mix of newness andheritage in LG- Investment in brand equity- Retail network continuously
refreshed and renovated- Outstanding performance in RTW
confirming design leadership- A contemporary take onfashion shows- Successful partnerships
with e-tailers- Leveraging strong identity inclassic and sportswear shoes- Increased digital projects
targeting new generations- Online experience integrated
with store network- Collaborations and Dropcollections driving consumer
excitement

H1 2018 Results Presentation – August 1st 201813

RetailGlobal retail network empowered by digital experience
Enhanced focus on consumer experience fully integrated with digital and social campaigns• Roll-out of 36 pop-up stores:- 25 Prada and 11 Miu Miu- Concepts: Prada: Silver line, Prada Spirit, Cabins, Sneakers, Nylon Vela, Prada Patch; Miu Miu: Pic Nic, Disco• Linea Rossa special set up in DOS in H2
Retail network continuously refreshed and renovated• 17 new openings and 13 closures- New Prada and Miu Miu openings at the Dubai Mall’s Fashion Avenue• ~30 renovation and relocation projects- 23 Prada and 7 Miu Miu- Miu Miu Blue concept already rolled out in 120 DOS

H1 2018 Results Presentation – August 1st 201814

Wholesale
Successful partnerships with premium e-tailers
Partnerships reinforced by exclusive capsule collections•

Prada Man capsule “bowling” for Mr Porter•

Prada Woman RTW capsule for Mytheresa promotedby R ‘n’ B artist Abra•

Prada capsule of 20 shoe models for Moda Operandi•

The Drop – shopping experience at Barneys•

Prada capsule for the 1st physical store of Ssense•

Church’s Vetements collaboration available at Matches
and Mr PorterFarfetch• Launched Prada and Miu Miu in H1-18 in US, Europeand Japan

H1 2018 Results Presentation – August 1st 201815

Direct e-commerce
Online experience integrated with retail network
PRADA• New platform rolled out across all key regions• Omnichannel experience in EU, US and China• Special projects in H1-18:- Cloudbust sneaker launch; Nylon farm
- Online capsule collections for Germany, UK,
US and Canada- Recently launched Pre-order Linea Rossa
MIU MIU• Released e-commerce in China and other key Asiancountries- Special projects in H1-18:- Miu Miu Blue Tales T-Shirts; Summer
Dreaming; Miu Delight; Iconic Wardrobe- Pre-order new collections on line

H1 2018 Results Presentation – August 1st 201816

Merchandising
Leveraging unique DNA and creativity in a more effective offer
Leather Goods - balanced mix of newness and heritage•

Broad-based organic growth across brands and regions•

Bags and Viaggio outperforming•

Successful new product launches along with contemporary
reinterpretation of iconic lines

RTW - outstanding performance confirming design leadership•

Accelerating performance in both men and women•

Successful reception of lifestyle collections•

Excellent response to Cruise fashion shows for Prada and Miu Miu

Footwear - leveraging strong identity in classic and sportswear•

Strong success of new sneakers for both men and women

Collaborations and Drop collections - driving consumer excitement•Prada Invites - Collaborations with 4 celebrated architects and designers
to reinterpret the iconic Prada Black Nylon across all categories

H1 2018 Results Presentation – August 1st 201817

Communication
Investment in brand equity•

In the recently opened white-concrete tower at Fondazione, Prada Group inaugurated the beautiful Torrerestaurant, managed by Marchesi, that has become soon an iconic destination in Milan•

The building also hosted the Prada FW18 women’s fashion show

H1 2018 Results Presentation – August 1st 201818

Communication
A contemporary take on fashion shows
Prada takes over Times Square in New York
•Prada held its Resort 2019 fashion show at its
NYC headquarters – the Piano Factory•

The show was projected live on Times Square’s
three iconic buildings: The Nasdaq Tower, theThomson Reuters Building and the central screenof the Triple Stack

Miu Miu Croisière at the Hotel Regina in Paris•

Miu Miu Croisière 2019 moved to the stunning
Belle Époque location overlooking the Louvre andthe Tuileries Garden•

Eclectic cast of high-profile models and actresses
such as Kate Bosworth, Naomi Campbell, ChloëSevigny, Uma Thurman•A “cinematic” set designed by six-time Academy
Award nominated and BAFTA award winning
production designer Sarah Greenwood

H1 2018 Results Presentation – August 1st 201819

Communication
Increased digital projects targeting new generations•Nylon Farm – a futuristic episodic film project dedicated to Prada’s emblematic Nylon fabric•Neon Dream – a short movie presents the FW18 Prada advertising campaign featuring model Amanda
Murphy and Sarah Paulson•

Prada Cinéma evolution – the new Prada Eyewear digital project for the Prada Cinéma collection•365 Observia / Industreality – 2 chapters of FW18 Prada men’s and women’s advertising campaigns set
in a fantastical «Prada warehouse»•Miu Miu Automne 2018 video – against the backdrop of London’s Barbican Centre the video directed byAlasdair McLellan’s with colour saturation treatments•Miu Miu the conversation – The new Miu Miu FW18 advertising campaign shot by Alasdair McLellan’s
evoke conversations among women

H1 2018 Results Presentation – August 1st 201820

Sustainability
Driving the conversation around sustainability, business and society• “Shaping a sustainable digital future” to be hosted on 20thNovember 2018 at Fondazione Prada, in partnership with Yale
School of Management and Politecnico di Milano School ofManagement• Following the 2017 conference, which focused on the interplay
between sustainability, creativity and innovation, the 2018
edition will discuss digitalization and sustainability• “Shaping a Sustainable Digital Future” will explore the large
impact and implications of digitalization on business andsocietal sustainability.

H1 2018 Results Presentation – August 1st 201821

Outlook

H1 2018 Results Presentation – August 1st 201822

Outlook#Prada FW18 adv campaign: «Walking into this neon dream. The journey begins»•

H1 2018 confirms Prada Group’s successful transformation
aimed at meeting fast-changing consumer expectations while
respecting the unique DNA of our brands•

We are now working on the complete integration of all ourchannels and communication tools on a single digital view.
This project will embrace the entire business from designers
right through to store staff•

We are confident that the disciplined execution of our straightforward strategy will unlock the full potential of our global
retail network and will drive long term sustainable growth

H1 2018 Results Presentation – August 1st 201823

Appendix

H1 2018 Results Presentation – August 1st 201824

Retail overview - 629 Dos at 30 June 18+4 Net openings yoy

JAPAN: 79

EUROPE: 228 (-1)

AMERICA: 110 (-2)

ASIA (EX-JAPAN): 189 (+5)
MIDDLE EAST
AND OTHER: 23 (+2)

Note: 629 Dos includes 3 Marchesi shops in Italy
H1 2018 Results Presentation – August 1st 201825

H1-2018€m

H1 2017 – proforma

H1 2018% change

Net Sales

1,510.6

98.4%

1,460.5

98.3%

Royalties

24.9

1.6%

25.5

1.7%

Net Revenues

1,535.3

100.0%

1,486.0

100.0%

COGS(429.5)

28.0%(408.1)

27.5%

Gross Margin

1,105.9

72,0%

1,077.9

72.5%

Selling(692.2)45.1%(691.8)46.6%

Advertising & Promotion(94.4)

6.1%(88.8)

6.0%

Product Development(64.6)

4.2%(66.0)

4.4%

G&A(95.5)

6.2%(94.1)

6.3%

Operating Expenses

946.7

61.7%

940.7

63.3%

+0.6%

EBIT

159.2

10.4%

137.2

9.2%

+16.0%Net Financial Income (Expenses)(10.4)

0.7%

0.6

0.0%

Income Taxes(43.6)

2.8%(41.6)

2.8%

Tax rate%

29%

Group Net Income

105.76.9%

95.4

6.4%

D&A

111.6

7.3%

113.5

7.6%

EBITDA

270.8

17.6%

250.6

16.9%

H1 2018 Results Presentation – August 1st 2018

+3.3%

+2.6%

30%
+10.7%+8.0%

26