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Prada Agrees to Take Over Milan Stores in Deal With Co-CEO

Prada Agrees to Pay 66 Million Euros to Take Over Milan Stores

(Bloomberg) -- Prada SpA will pay 66 million euros ($73 million) to its co-CEO to take control of four company stores in Milan, allowing the Italian fashion brand to clean up its corporate structure.

The Hong Kong-listed company said it reached an agreement with co-founder Miuccia Prada Bianchi and a holding company she controls for the Milan stores, including its first-ever location that has operated since 1913. The move “will be an important step in further developing and extending the group’s brand identity,” according to a company statement.

Designer Prada Bianchi has run the Milan-based fashion house since the late 1970s with her husband and co-CEO Patrizio Bertelli. When Prada shares were floated in their 2011 Hong Kong listing, the brand’s founding Milan boutiques weren’t included in the deal as Prada Bianchi and her relatives were loath to loosen their grip on this nexus of the family’s prestige.

The parent company reported 19.7 million euros of profit last year related to its franchise agreement for the Milan stores.

Prada stock rose as much as 1% in early trading in Hong Kong on Wednesday. The shares have fallen more than 5% this year, trailing the 3.6% gain for Hong Kong’s Hang Seng index.

The Milan store agreement comes as investors have been waiting years for a turnaround at the high-end fashion house, known for its sleek handbags and sporty apparel. Earnings per share have tumbled more than 60% since 2014.

Sales were flat for the first half of 2019 as Prada took a hit from efforts to bolster its exclusive image by limiting markdowns. The company said it also was slashing its wholesale business by half in a bid to gain greater control over its merchandise by selling more of it in Prada’s own stores.

To contact the reporters on this story: Jonathan Roeder in Chicago at jroeder@bloomberg.net;Robert Williams in Paris at rwilliams323@bloomberg.net

To contact the editors responsible for this story: Anne Riley Moffat at ariley17@bloomberg.net, Hari Govind

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