When Prada’s outspoken boss Patrizio Bertelli hinted that his eldest son would take over the group a few years ago, industry experts and insiders at the Milan-based fashion powerhouse knew the transition would not happen overnight.
“It takes a long time to learn the job of a CEO,” the 76-year-old chief executive said in an interview last year.
Now, the Italian luxury group is taking decisive steps towards implementing the complex succession that will eventually lead to Lorenzo Bertelli taking over from his parents, Patrizio Bertelli and Miuccia Prada, who have led the 110-year-old retailer since the late 1970s.
The group, which also owns brands Miu Miu and Church’s, named former Luxottica chief Andrea Guerra as successor to co-chief executives Bertelli and Prada in December. It also appointed Gianfranco D’Attis, the departing boss of Dior US, as the first ever chief of Prada, the company’s main brand. Both executives start this month. Lorenzo, 34, who currently heads the group’s corporate social responsibility department, is expected to take the helm within a few years.
The changes at the top come as the Hong-Kong listed group works on a secondary listing in a bid to diversify its investor base. It also wants to attract a greater number of young customers as Generation Z increasingly drive sales at luxury brands. A Prada leather shoulder bag costs €3,400, while a pair of sunglasses can be between €310 and €620.
Industry experts believe the reshuffle indicates that the family is aware of the complexity of the transition considering Bertelli and Prada are still the main creative minds behind the company’s success.
Analysts and investors have reacted positively to the recent changes at the €14bn group.
“Patrizio wanted to give reassurance to investors and to the market that there would be an experienced professional to lead the transition . . . Lorenzo will be more hands on and Guerra will take the company forward,” said Equita analyst Paola Carboni.
“Lorenzo’s contribution to Prada has been important but an external manager can be the right choice to make the generational shift smoother in what is an increasingly complex sector and macro environment,” she added.
Insiders at Prada see the shift as a unique challenge. The chief executives’ entrepreneurial vision would be hard to replicate in the future, they said. The pair turned Miuccia’s family’s local leather goods business into one of the most recognisable fashion brands in the world.
“Patrizio is not just the entrepreneur behind the group, he and Miuccia are the creative minds behind every single store and fashion line,” said one person close to the family, who spoke on condition of anonymity.
“When Miuccia and [co-creative director] Raf Simons sit down to design the collection, Patrizio sits down with them and then he and his team come up with prototypes of the design,” the person added.
Simons also announced in December that he was closing his eponymous brand this year. The move was interpreted as a sign that he will be increasingly focusing on his job at Prada.
Lorenzo, a former race car driver, is “a very hard worker and a very fast learner but he’s not a creative mind”, said the person close to the family.
“The family is well aware that taking the company forward is the next big thing and Lorenzo’s role has been the subject of numerous conversations between the three of them,” the person added.
Bankers and advisers have also noted the heir has his parents’ ear when it comes to potential dealmaking.
The luxury house is looking at buying stakes in several local Italian companies in their supply chain to secure production, as many small firms have taken a financial hit during the pandemic or are facing succession challenges of their own as younger generations often turn their backs on family businesses.
Equita’s Carboni credits Lorenzo with having pushed Prada towards more “genuine and credible” sustainability commitments. He also helped burnish its digital credentials, “not just in terms of marketing and online sales but also by using data analytics to manage the business”.
Meanwhile, Guerra and D’Attis will now be charged with supporting the family in taking the group through its most imminent challenges.
A dual listing, which the group has been exploring, will be in their in-tray. People close to these discussions said there was no precedent of a dual listing in Hong Kong and Milan and it would not be easy to structure. The family is also keen to maintain its current 80 per cent stake in the group.
The company, which will report its 2022 full-year results by March 17, is expected to have had a strong year of growth in Asia, where it has been one of the most popular luxury fashion brands for more than a decade.
“Prada owes this to Bertelli’s vision who saw China’s growth back in 2010, the establishment of new cities, and immediately took out commercial space in the malls that were being built,” said the person close to the family.
However, the group is still lagging behind competitors in America. D’Attis, who headed Dior Couture US, is expected to “amplify Prada’s potential” overseas and in the US particularly.
In November, the company outlined its goal of reaching €4.5bn in annual sales in the medium term, up from €3.3bn in 2021.
But analysts believe high inflation and looming recessions across the globe will test luxury groups’ strength only three years after the disruption caused by the pandemic.
“Professional management brought in from outside the company is the best way to navigate this environment and propel Prada toward its new and transformed future,” said the person close to the family.