Prada CEO Steps Down Amid 4% Revenue Growth, Miu Miu Surges 93%

Prada, the renowned Italian luxury brand, announced that its brand CEO will be stepping down at the end of this month. The departure, described as a mutual agreement, comes amidst a backdrop of underwhelming financial performance and strategic challenges. The outgoing CEO, who joined Prada in January 2022 as its first non-family CEO, had been instrumental in driving the brand's expansion into the Chinese and American markets. During the tenure, new product categories such as home goods and recycled jewelry were introduced, and the retail structure was optimized to attract younger consumers.

The decision to part ways with the CEO follows a period of stagnant growth for Prada. The company's annual revenue for 2024 grew by a mere 4%, and the first quarter of 2025 saw no growth at all, falling short of market expectations. In contrast, Miu Miu, another brand under the Prada Group, has shown remarkable growth. Miu Miu's retail sales surged by 93% in 2024 and continued to grow by 60% in the first quarter of 2025. This disparity in performance has led to a significant shift in the brand's market share within the group. Miu Miu's retail sales now account for 31% of the group's total sales, up from 21.8% in the first quarter of 2023, while Prada's share has decreased by 9.1 percentage points to 68%.

The contrasting performance of the two brands has prompted the group to make strategic adjustments. In response to the financial report, the group's CEO announced plans to increase Miu Miu's store footprint by 10% to 15% and open 10 to 15 new stores in 2025. Prada's store footprint is also expected to expand by 5% to 10%. These moves are part of a broader strategy to capitalize on Miu Miu's success and address the challenges faced by the Prada brand.

The timing of this leadership change is particularly noteworthy as it coincides with a critical period for the Prada Group. In April 2024, the group acquired Versace for 12.5 billion euros, further expanding its brand portfolio. The acquisition of Versace, known for its distinctive and complementary style, is seen as a strategic move to enhance the group's market presence and drive growth. However, the integration of Versace poses significant challenges, requiring substantial financial investment, managerial focus, and short-term sacrifices.

The luxury goods market is currently facing a slowdown in demand, exacerbated by the uncertain economic outlook in China and the United States. This environment has led to a wave of management changes across the industry, with major players also making key personnel adjustments. The departure of Prada's CEO is part of this broader trend, reflecting the industry's need for strategic realignment in response to market challenges.

The acquisition of Versace is expected to bring long-term benefits, but it also presents immediate challenges. Some investors have expressed concerns that Versace could be a short-term burden, requiring significant resources to turn around. Analysts have noted that while Versace has the potential to complement Prada's existing brands, the integration process will be complex and demanding. The success of this acquisition will depend on Prada's ability to manage the integration effectively and leverage the strengths of both brands.

The luxury goods sector is entering a phase of low growth, with projections indicating that global luxury sales will grow by only 2% to 4% annually from 2025 to 2027. In this challenging environment, Prada's ability to navigate these changes and achieve synergies between its brands will be crucial. The departure of the CEO and the strategic adjustments being made by the group reflect a proactive approach to addressing these challenges and positioning Prada for future success.