Prada Recovers Strongly From Pandemic Led by Americas and Asia

Prada is one of the most recognised and best-loved luxury brands and is an important design authority. It has developed a global retail network of over 600 stores for Prada and Miu Miu, many of which are in important travel locations. Although dilutive to returns in the short run (return on invested capital currently at 1%, versus 13.6% in 2013), control over distribution strengthened the company's brand moat--showcasing the brand, avoiding excessive discounting, and maintaining strong negotiating clout with wholesalers. As the retail infrastructure has been built out and new demand comes from existing stores, operating costs should be leveraged. Prada is a relatively late adopter of digital distribution and marketing channels. These channels will need capital investments in the short term (at a lower rate than prior-year retail expansion) but could become quite profitable over time.