Prada

Prada
Type Privately held
Industry Fashion
Founded 1913
Founder(s) Mario Prada
Headquarters Milan, Italy
Number of locations Over 250 Worldwide boutiques
Key people Miuccia Prada, Head Designer
Patrizio Bertelli, CEO
Vincenzo Prada, SVP & COO
Sebastian Suhl, SVP & CCO
Donatello Galli, CFO
Products Luxury goods
Revenue 1.7 billion €
Website www.prada.com

Prada S.p.A. is an Italian fashion label specializing in luxury goods for men and women (ready-to-wear, leather accessories, shoes, luggage and hats), founded by Mario Prada. The label is referred to by some people as a status symbol.[1]

Contents

History

Foundations

The company was started in 1913 by Mario Prada and his brother Martino[2] as a leathergoods shop - Fratelli Prada (English: Prada Brothers) - in Milan, Italy.[1][3] Initially, the shop sold leather goods and imported English steamer trunks and handbags.[4]

Mario Prada did not believe that women should have a role in business, and so he prevented female family members from entering into his workshop. Ironically, Mario's son harbored no interest in the business, so it was his daughter Luisia Prada[2] who took the helm of Prada as his successor, and ran it for almost twenty years.[4] Her own daughter, Miuccia Prada, joined the company in 1970, eventually taking over from her mother in 1978.[2]

Miuccia began making waterproof backpacks out of Pocone.[1][3] She met Patrizio Bertelli in 1977, an Italian who had begun his own leathergoods business at the age of 17, and he joined the company soon after.[4] He advised Miuccia—and she followed the advice—on better decisions for the Prada company. It was his advice to discontinue importing English goods and to change the existing luggage styles.[4]

Prada's ascent into high-fashion

Miuccia inherited the company in 1978 by which time sales were up to U.S. $450,000.[4] With Bertelli alongside her as business manager, Miuccia was allowed time to implement her creativity onto design.[1] She would go on to incorporate her ideas into the house of Prada that would change it.[1]

She released her first set of backpacks and totes in 1979. They were made out of a tough military spec black nylon that her grandfather had used as coverings for steamer trunks.[4] Initial success was not instant, as they were hard to sell due to the lack of advertising and high-prices, but the lines would go on to become her first commercial hit.[4]

Next, Miuccia and Bertelli sought out wholesale accounts for the bags in upscale department stores and boutiques worldwide.[4] In 1983, Prada opened a second boutique in Milan reminiscent to the original shop, but with a sleek and modern contrast to it. It was opened in the shopping district of Galleria Vittorio Emanuele II.[4]

The next year, Prada released its nylon tote.[4] That same year, the house of Prada began expansion across continental Europe by opening locations in prominent shopping districts within Florence, Paris, Madrid, and New York City.[4] A shoe line was also released in 1984.[4] Miuccia released the classic Prada handbag in 1985, that went on to become an overnight sensation.[1]

It was practical and fashionable, functional and sturdy. In 1987, Miuccia and Bertelli married.[4] Prada launched its women's ready-to-wear collection in 1989, and the designs came to be known for their dropped waistlines and narrow belts.[4] Prada's popularity skyrocketed when the fashion world took notice of its clean lines, opulent fabrics, and basic colors.[1]

Time described the apparel as "unassertive, combining traditional good manners and an ultramodern industrial sleekness."[4] Truly, the designs to come out of the House of Prada reflected the feminine worker aesthetic, which made it quite unique in contrast to other high-fashion brands.[4] It would be identified with affluent working women who held demanding jobs."[4] Thus, it is no surprise that Miuccia took it upon herself to call her women's bags "uniforms."[4]

The logo for the label was not as obvious a design element as those on bags from other prominent luxury brands such as Louis Vuitton.[4] Its appeal, including the apparel, was its image of "anti-status" or "reverse snobbery."[4]

1990s

Prada's originality made it one of the most influential fashion houses,[1] and the brand became a premium status symbol in the 1990s.[4] The signature Prada look encompassed luxurious fabrics in mostly black, browns, grays, greens, and creams to create simple, yet provocative styles. Life in Italy states that clothing was "sexy and spoke of confidence without revealing too much skin. Accessories included skinny leather belts, elegant high heeled shoes, and of course, the classic handbag."[1]

Sales were reported at L 70 billion, or US$31.7 million, in 1990.[4] Partrizio di Marco took charge of the growing business in the United States after working for the house in Asia. He was successful in having the Prada bags prominently displayed in department stores, so that they could become a hit with fashion editors. Prada's continued success was attributed to its "working-class" theme which, Ginia Bellafante at the New York Times Magazine proclaimed, "was becoming chic in the high-tech, IPO-driven early 1990s."[4] Furthermore, now husband and wife, Miuccia and Bertelli led the Prada label on a cautious expansion, making products hard to come by.[4]

In 1992, the high fashion brand Miu Miu, named after Miuccia's nickname, launched. Miu Miu catered to younger consumers, such as celebrities.[4] By 1993 Prada was awarded the Council of Fashion Designers of America award for accessories.[1][3]

Men's ready-to-wear collections were launched in the mid-1990s.[4] By 1994, sales were at US$210 million, with clothing sales accounting for 20% (expected to double in 1995).[4] Prada won another award from the CFDA, in 1995 as a "designer of the year"[3][5] 1996 witnessed the opening of the 18,000 ft² Prada boutique in Manhattan, New York, the largest in the chain at the time.[4] By now the House of Prada operated in 40 locations worldwide, 20 of which were in Japan.[4] The company owned eight factories and subcontracted work from 84 other manufacturers in Italy. Miuccia's Prada and Bertelli company were merged to create Prapar B.V. in 1996.[4] The name, however, was later changed to Prada B.V. and Patrizio Bertelli was named Chief Executive Officer of the Prada luxury company.

In 1997, Prada posted the revenue at US$674 million.[4] Another store in Milan opened that same year. According to the Wall Street Journal, Bertelli smashed the windows of the store a day before the opening, after he had become deeply unsatisfied with the set-up.[4] Prada also acquired shares in the Gucci group, and later blamed Gucci for "aping his wife's designs."[4] In June 1998, Bertelli gained 9.5% interests at US$260 million.[4] Analysts began to speculate that he was attempting a take over of the Gucci group. The proposition seemed unlikely, however, because Prada was at the time still a small company and was in debt. Funding Universe states that "At the very least, Prada had a voice as one of Gucci's largest shareholders (a 10 percent holding would be required for the right to request a seat on the board) and would stand to profit tidily should anyone try to take over Gucci."[4] However, Bertelli sold his shares to Moët-Hennessy • Louis Vuitton chairman Bernard Arnault in January 1998 for a profit of US$140 million.[4] Arnault was in fact attempting a take over of Gucci. LVMH had been purchasing fashion companies for a while and already owned Dior, Givenchy, and other luxury brands. Gucci, however, managed to fend him off by selling a 45$stake to industrialist François Pinault, for US$3 billion.[4] In 1998, the first Prada menswear boutique opened in Los Angeles.[3]

Prada was determined to hold a leading portfolio of luxury brands, like the Gucci group and LVMH. Prada purchased 51% of Helmut Lang's company based in New York for US$40 million in March 1999. Lang's company was worth about US$100 million. Months later, Prada paid US$105 million to have full control of Jil Sander A.G., a German-based company with annual revenue of US$100 million. The purchase gained Prada a foothold in Germany, and months later Jil Sander resigned as chairwoman of her namesake company.[4] Church & Company, an English shoes maker, also came under the control of Prada, when Prada bought 83% of the company at US$170 million.[4] A joint venture between Prada and the De Rigo group was also formed that year to produce Prada eyewear.[4] In October 1999, Prada joined with LVMH and beat Gucci to buy a 51% stake in the Rome-based Fendi S.p.A.[4] Prada's share of the purchase (25.5%) was worth US$241.5 million out of the reported US$520 million total paid by both Prada and LVMH.[4] Prada took on debts of Fendi, as the latter company was not doing well financially.

These acquisitions elevated Prada to the top of the luxury goods market in Europe.[4] Revenue tripled from that of 1996, to L 2 trillion. Despite apparent success, the company was still in debt.[4]

A new look into the 21st century

The company's merger and purchasing sprees slowed in the 2000s. However, the company signed a loose agreement with Azzedine Alaia.[6] Skin care products in unit doses were introduced in the United States, Japan and Europe in 2000. A 30-day supply of cleansing lotion was marketed at the retail price of US$100.[4] To help pay off debts of over US$850 million, the company planned on listing 30% of the company on the Milan Stock Exchange in June 2001. However, the offering slowed down after a decline in spending on luxury goods in the United States and Japan. In 2001, under the pressure of his bankers, Bertelli sold all of Prada's 25.5% share in Fendi to LVMH. The sale raised only US$295 million.[4]

By 2006, the Helmut Lang, Amy Fairclough, and Jil Sander labels were sold. Jil Sander was sold to the private equity firm Change Capital Partners, which was headed by Luc Vandevelde, the chairman of Carrefour, while the Helmut Lang label is now owned by Japanese fashion company Link Theory. Prada is still recovering from the Fendi debt. More recently, a 45% stake of the Church & Company brand has been sold to Equinox.

According to Fortune, Betelli plans on increasing revenue of the company to US$5 billion by 2010.

Prada manufactures its wares in Italy, apparently keeping labor costs down by using Chinese laborers at the plants.[6][7]

Prada is the main buyer from the Turkish leather factory DESA, which was found guilty by the Turkish Supreme Court of illegally dismissing workers who joined a union. The Clean Clothes Campaign, a labor rights organization based in Europe, has called on Prada to ensure that freedom of association is respected at the factory.[8]

Businesses today

Runway shows

Prada, along with Calvin Klein and Gucci, is known for the practice of casting new models to walk exclusively in their runway shows. Usually, one of the models chosen as an exclusive will open a Prada show. An exclusive or opening spot in a Prada show is among the most coveted bookings in the modeling world. Previous Prada exclusives and openers who have gone on to success in the fashion world include Daria Werbowy, Gemma Ward, Suvi Koponen and Sasha Pivovarova, who went on to appear in Prada's ad campaigns for six consecutive seasons after opening the Prada fall 2005 runway show.

Prada boutiques

The Prada boutique at the Galleria Vittorio Emanuele II in Milan, Italy.
A Prada shop in Rome, Italy.

Prada has commissioned architects, most notably Rem Koolhaas and Herzog & de Meuron, to design flagship stores in various locations. A duplex megastore was opened in Kuala Lumpur at the Pavilion Kuala Lumpur in late 2008. Prada commissioned an unusual multi-purpose building called the Prada Transformer in Seoul. And 2009 saw the opening of a new store on Corso Venezia, Milan, designed by architect Robert Baciocchi, focussing on the Prada Made to Order collection.[9]

LG Prada cell phone

The Prada LG KE850 mobile phone.

In May 2007, Prada joined forces with cell phone maker LG Electronics to produce the LG Prada KE850 phone. The retail price was $800.

In 2009, KF900, the second generation of the phone, was launched in Europe. With 3G capability, the phone featured a new sliding QWERTY keyboard, which made it bulkier, but functional. The phone also worked with the new Prada Link watch, which users can use to view text messages via a Bluetooth connection to their phone.

Prada in culture

References

  1. ↑ 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 Grosvenor, Carrie. "The History of Prada". Life in Italy. http://www.lifeinitaly.com/fashion/prada.asp. Retrieved 2008-06-02. 
  2. ↑ 2.0 2.1 2.2 "Miuccia Bianchi Prada - Biography". Fashion-Forum.org. http://www.fashion-forum.org/fashion-designers/miuccia-prada.html. Retrieved 20 March 2010. 
  3. ↑ 3.0 3.1 3.2 3.3 3.4 "Prada". Fragrance X. http://www.prada.us/products/_bid_Prada-am-cid_skincare-am-lid_P__brand_history.html. Retrieved 2008-06-03. 
  4. ↑ 4.00 4.01 4.02 4.03 4.04 4.05 4.06 4.07 4.08 4.09 4.10 4.11 4.12 4.13 4.14 4.15 4.16 4.17 4.18 4.19 4.20 4.21 4.22 4.23 4.24 4.25 4.26 4.27 4.28 4.29 4.30 4.31 4.32 4.33 4.34 4.35 4.36 4.37 4.38 4.39 4.40 4.41 4.42 4.43 4.44 4.45 "findinduniverse". Funding Universe. http://www.prada.us/company-histories/Prada-Holding-BV-Company-History.html. Retrieved 2008-06-02. 
  5. ↑ "Prada". http://www.prada.us. Retrieved 2008-06-03. 
  6. ↑ 6.0 6.1 http://www.prada.us/redir/prada-home
  7. ↑ http://www.labornotes.org/flexinode/list/3
  8. ↑ http://www.cleanclothes.org/luxury-brands-drag-their-feet
  9. ↑ Cat Tsang (October 2009). "Prada: the personal touch". Glass Magazine. http://theglassmagazine.com/forum/feature.asp?tid=614. Retrieved 2009-10-16.