Prada Outpaces Fashion Rivals on Miu Miu’s Gen Z Appeal

(Bloomberg) -- Prada SpA defied a luxury industry slump last quarter as fashion fans snapped up Miu Miu’s Arcadie handbags and cashmere cardigans.

Comparable retail sales at the Italian group grew 18% in the third quarter, the Hong Kong-listed company said Wednesday. Those at its biggest label, Prada, rose 1.7%, while Miu Miu sales more than doubled during the period.

Prada has been outperforming high-end fashion rivals thanks to the success of its products among Gen Z consumers, led by the extraordinary growth rates at sister label Miu Miu, which now makes up about a quarter of group sales.

The brand was the hottest label during the period, rising one notch from the previous quarter on the Lyst index, which tracks searches and social media mentions. Prada remained third. Miu Miu’s Arcadie bag proved especially popular, according to the index. Its mini version starts at €1,850 ($2,004) in France.

Prada noted “more challenging market conditions” during the quarter in Asia Pacific, where sales grew 12%. The zone, hurt by a consumer downturn in China, has been a drag on other fashion competitors, from LVMH Moët Hennessy Louis Vuitton SE to Gucci-owner Kering SA.

Japan saw the highest growth rate among regions thanks to strong tourist spending, Prada said.

The company should be able to a name a new CEO for Miu Miu in the next two months after Benedetta Petruzzo left to become managing director of Christian Dior Couture, Prada Chief Executive Officer Andrea Guerra said Wednesday. Petruzzo’s new role at the LVMH label was announced early last month.

Miuccia Prada, the granddaughter of the group’s founder, is creative director at Miu Miu and splits those duties at Prada with Raf Simons.

The market could be underestimating the growth that Miu Miu can generate in the next 12 to 18 months, Bernstein analyst Luca Solca wrote in a note after the trading update. But Solca added he’s worried the Prada brand could be “well past its peak growth potential.”

(Updates with group CEO comments, geographical breakdown)