Prada's Scion Steps Off Racetrack and Into Executive Suite
(Bloomberg) -- Lorenzo Bertelli, the 30-year-old son of Prada’s co-chief executive officers, has joined the company in a key role, putting him into position as a possible successor to the husband-and-wife duo that turned the Italian luggage maker into a global fashion powerhouse.
The eldest son of Miuccia Prada and Patrizio Bertelli joined as head of digital communication last September, a spokeswoman said. The scion of one of Italy’s wealthiest families is winding down his career as a racecar driver to join Prada, but the company had not previously disclosed the appointment.
His 70-year-old mother and 72-year-old father control about 80 percent of Hong Kong-listed Prada SpA, which also owns the Miu Miu, Church’s and Car Shoe brands. The lack of an apparent successor and an acquisition spree by French luxury conglomerates LVMH and Kering had raised market speculation that the co-CEOs might entertain approaches from suitors. Lorenzo’s appointment is expected to reduce the likelihood of any changes in the ownership structure in the near term, according to people familiar with the situation.
Prada’s rivals are also dealing with succession concerns. Bernard Arnault, chairman and CEO of luxury leader LVMH, has moved to cement his children’s place in the company -- most recently giving son Antoine full authority over image and communications. Karl Lagerfeld, creative director of closely held Chanel, is 84, and the company has disclosed no plans for replacing him.
After profit fell for the past three years, Prada has promised a return to growth in 2018. The shares have gained about 40 percent this year amid rising luxury demand in China. To fuel its turnaround, the company is focusing on e-commerce and bringing back its Prada Sport line, the sub-label that pioneered luxury athletic wear in the 1990s.
“We have seen a promising start to 2018,” Patrizio Bertelli said in March. “I am confident this is the beginning of a new phase.”
Prada shares fell as much as 2.5 percent in Hong Kong on Friday.
After rocking the Italian luxury industry by selling industrial nylon bags in the 1980s, Prada set the fashion agenda for more than two decades with products that challenged traditional ideas of style and beauty.
“People say I’m punk,” Miuccia Prada said backstage at her runway show last September, when she dismissed talk of lackluster growth. “I don’t want to be judged by sales.”
Before his transformation from rally driver to digital executive, Lorenzo Bertelli studied philosophy. In 2015, the same year he joined the board of the holding company through which the family controls Prada SpA, he told Italian newspaper Corriere della Sera: “I don’t think I have many years left to have fun because I will soon have to work in the family business.”
Last October, Bertelli sat in the front row at his mother’s Miu Miu show in Paris. He’s now working in what has been Prada’s weakest corner: digital. The company is struggling to catch up with competitors who were quicker to understand the power of e-commerce and social media. The brand is shifting focus to online advertising and investing in e-commerce. In December, it launched an online store in China, following brands like Louis Vuitton and Saint Laurent.
“Our digital transformation program is going well and is driving growth for the business,” said Chiara Tosato, the digital and e-commerce director, earlier this year.
Though Prada’s turnaround has started, the company still faces major challenges. Even with the share gains this year, the stock has fallen 50 percent since its peak in 2013 after Prada opened too many stores in China and pushed prices skyward. The brand didn’t adapt quickly enough to the rise of designer sneakers and expensive hoodies, but new products like $470 leather clutches and $1,500 tote bags could help it catch the wave of rising luxury demand the company missed last year.
Sales grew 7 percent in the first two months of this year, a far cry from the 38 percent first-quarter gain at Kering-owned Gucci, where designer Alessandro Michele seduced consumers with bags decorated with moths, snakes and flowers -- often priced several hundred dollars lower than the options offered by Prada.
©2018 Bloomberg L.P.