Crazy Miu Miu
Miu Miu is performing well.
The Prada Group has released its first quarter results, with revenues increasing by 16 per cent to €1.187bn. This growth has been seen across all brands and markets. Core brand Prada sales have risen by 7 per cent to €826 million, accounting for 77 per cent of total sales, while Miu Miu sales have increased by 89 per cent to €233 million, accounting for 22 per cent of total sales.
It is clear that Miu Miu's results have come as a shock to the industry. It is also worth noting that in the fourth quarter of 2023, Miu Miu's sales increased by 82%.
There is no doubt that Prada is currently one of the luxury groups with the best momentum, while Miu Miu is the biggest dark horse in the market. Lyst's Q1 2024 report indicates that Miu Miu has regained the top position, with an 8% increase in searches. Notably, three of its products have also made it to the top 10 list of most popular products, marking a first for the brand. Conversely, Prada has dropped to second place from first in the previous quarter.
It is true that Miu Miu has a low base, which is a prerequisite for its high double-digit growth. However, if it continues to grow by as much as 58 per cent in 2023, Miu Miu will top €1 billion this year. At a more conservative 30 per cent growth rate, Miu Miu will be in that bracket by 2025 at the latest.
In the current market environment, luxury consumption remains strong, with consumers making rational brand choices and investing in the top luxury brands and those with the most current momentum. A brand with a size of 1 billion euros is capable of forming an independent culture and business climate. In other words, Miu Miu will be truly free from being seen as a Prada side brand. Despite the Prada Group's continued emphasis on the distinction between Miu Miu and Prada, the market has rarely viewed Miu Miu as a standalone brand.
Even Creative Director Miuccia Prada has not made a conscious effort to differentiate between the two brands in terms of commercial positioning. Rather than being younger, Miu Miu is more agile.
This distinction is too abstract for the capital market, which looks at the numbers, and for the consumer, who looks at the product. In terms of pricing, Miu Miu will not be lower than Prada. Creatively, Miu Miu was previously unique but always seemed to lack an ambition to be widely recognised.
This changed dramatically in 2020. Miu Miu initially received limited attention, but began to make rapid strides in 2021.
The driving force behind this change was creativity. When the market studies the success of Prada and Miu Miu, it tends to focus on the other side of the coin, overlooking the key differentiator between this group and other mid-range luxury brands or luxury giants: creative coherence.
Despite their different stylistic expressions, the two brands focus on the paradoxical nature of the world and take it upon themselves to subvert the notion of beauty and ugliness. Their pioneering nature is easily accepted by the public. Unlike the experimental nature of Japanese and Belgian designers, Miuccia Prada is intellectual prudence, a rebellion under the illusion of conservatism.
While it might appear that Miu Miu is simply popularising conventionally feminine styles in the marketplace, the brand is also challenging societal norms with trends such as the wearing of underwear outside the home. While the majority of consumers do not dress in this way, the brand's ability to set the agenda for fashion trends is evidenced by its ability to deliver such an image to the masses. In essence, the Prada Group is a company that consistently challenges the status quo. Its two Prada brands are a testament to the enduring principle that creativity is the driving force behind successful fashion businesses.
The Prada Group is experiencing synergistic growth as a result of a long-term creative continuity and a clearer understanding of operational fundamentals. Even Church's, the group's perennial underperformer, returned to growth in the first quarter of the year after years of stagnation. The first quarter results present an important milestone or key opportunity for the group. They allow for the correction of market perceptions and the re-establishment of the group's image.
Today, Prada is positioned as the mid-range brand most likely to be close to the head luxury brand. It is a brand style pioneer niche, but in terms of overall strength, it has entered the core battleground. Prada has two brand ideas that have been strong for a long time. It has improved its commercial operation, enabling it to transform ideas into specific, explosive products. This has led to the success of not only handbags, but a number of categories in full bloom.
