New CEO gives Prada more stylish look for listing

Prada SpA

07/12/2022 24:08

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are her own.)
    By Lisa Jucca
       MILAN, Dec 6 (Reuters Breakingviews) - Prada’s  1913.HK 
new look seems designed to please investors. The $15 billion
fashion brand has picked Andrea Guerra as its next chief
executive. The Italian manager, who led eyewear giant Luxottica
before a stint at LVMH  LVMH.PA , will replace powerful founder
and co-CEO Patrizio Bertelli, and his 73-year-old designer wife
Miuccia Prada. Putting a tested outsider in charge will increase
Prada’s appeal as it readies a possible listing in Milan.   
    Guerra’s professional background makes him well placed for a
tricky role. Like many luxury companies, Hong-Kong listed Prada
is tightly controlled by its two founders, who own an 80% stake.
As CEO, Guerra, 57, won’t be too far away from the forceful
76-year-old Bertelli, who is moving one floor up to become
chairman. Yet Guerra has experience handling
influential founders: at Luxottica he worked closely with
deceased billionaire Leonardo Del Vecchio,
another energetic Italian entrepreneur. A stint at $379 billion
LVMH also gave Guerra a window into the world’s biggest luxury
conglomerate.    
    Guerra’s experience will help Prada better execute an
otherwise challenged succession plan. At a 2021 investor
day Bertelli anointed son Lorenzo, 34, as future CEO. Yet the
family scion is still relatively inexperienced. Working side by
side with Guerra would strengthen the Prada heir’s corporate
skills and help accelerate a turnaround that is forecast to lift
operating profit margins to 21% by 2024 from just 15% last
year.   
    The move could bring other advantages. The Italian group,
which unusually listed in Hong Kong in 2011, is exploring ways
to also trade its shares in Milan in a bid to attract more
European investors and spruce up a lacklustre valuation. Prada’s
shares have lost 14% since the IPO, while Milan-listed Moncler’s
 MONC.MI  stock has gained over 200% since its 2013 listing.
Guerra could reassure potential new investors that Prada is well
run and shielded from too much family interference. Recent
appointments of Goldman Sachs  GS.N  alumni Paolo Zannoni and
Andrea Bonini to the board also help.   
    The problem for the two founders is that a sale of new
shares could also see the Prada family’s stake diluted. To solve
the conundrum, Prada itself could buy back stock in Hong Kong,
and then re-issue it in Milan. That might require the group to
take a hit, as new investors may want a discount. Bringing on
board an established manager like Guerra, however, may boost
Prada’s appeal, and make any listing less risky.
    Follow @LJucca on Twitter
    CONTEXT NEWS
    Italian fashion group Prada said on Dec. 6 that it would
name Andrea Guerra as its new chief executive. Guerra, 57, will
be recommended as the new CEO at a board meeting on Jan. 26. 
    He will replace current CEO and founder Patrizio Bertelli,
76, who will become chairman of the luxury company. 
    Bertelli’s wife and co-CEO Miuccia Prada, 73, will remain
the creative director of the Miu Miu and Prada brands, the
latter together with designer Raf Simons. 
    Hong Kong-listed Prada has been exploring the possibility of
a second listing in Milan.
 (Editing by Neil Unmack and Oliver Taslic)
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