After transforming a small leather store in Milan into a $19 billion luxury empire, Miuccia Prada and Patrizio Bertelli have taken the first steps on a long-term path to securing the future of Prada SpA.
Lorenzo Bertelli, the eldest son of the billionaire couple, has already taken on important stakes, while accumulating experience in daily operations leading marketing and sustainability units.
Succession is a critical issue for Italian family businesses like Prada, and it is not typical for founders to take action, especially when they remain heavily involved.
But Miuccia, 76, and Patrizio, 78, intend to hand over the reins in a way that ensures Prada maintains its independence. This is a significant challenge in the world of high luxury, where multi-brand giants such as LVMH and Kering SA dominate.
Italy has seen one brand after another being acquired by major global players. LVMH owns Fendi and Loro Piana and recently bought a stake in the company that controls Moncler SpA. The L Catterton fund, backed by LVMH, was instrumental in taking shoemaker Tod’s SpA private. Kering owns Gucci, of Bottega Veneta and has the option of obtaining control of Valentino.
The risk for Italy is becoming marginal as decision-making shifts to Paris, London and New York, despite around 80% of luxury goods sold globally passing through Italian workshops and factories, according to Patrizio. For the families behind the brands, it means loss of control and prestige.
To protect herself against this fate, Miuccia – internally nicknamed “La Signora” – preemptively transferred ownership of almost all of her shares in important entities, according to Italian documents. Even though he retained his right to vote, Lorenzo, 36, received 50.5% of his holding Ludo SpA. His younger brother, Giulio – who currently does not plan to work in the family company – got the rest.
So far, Patrizio has not taken similar steps and maintains full control of his investment vehicle, the Italian documents show. This will not change Lorenzo’s position, as his shares could be divided three ways, as he has a daughter from another relationship. Thus, Patrizio – the mastermind of Prada’s industrial expansion – firmly supports the change.
In an interview with Bloomberg in 2021, he said it would be up to Lorenzo to decide when he will be ready to take the reins of the group. At the time, the elder Bertelli said he could hand over the job in about three years.
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The transfer of ownership means the former rally driver will now hold the largest stake in the family holding company, which owns 80% of Prada. This would support his growing role in the company. Lorenzo’s job list includes marketing director, head of corporate social responsibility and executive director.
Although Lorenzo told his parents years ago that he was prepared to work in the family business, it will be difficult to lead the group successfully. In the unpredictable world of luxury, the next stage of Prada’s story could be fraught with greater turmoil. The conditions that allowed Miuccia to transform Prada into a global sensation no longer exist.
Demand in China, which drove a long boom in luxury goods, has slowed. And increasingly, size matters. Smaller brands like Prada have struggled to keep up with the investment needed to compete with global giants, and prime locations on the luxury shopping streets of Milan, New York and Shanghai are almost as important as having the right collection.
Prada and the family holding company recently spent more than $800 million to expand its presence in New York with the acquisition of two buildings on Fifth Avenue. That’s before the cost of renovations and represents a significant undertaking for a company like Prada, which had revenue of €4.7 billion in 2023 – compared to more than €86 billion for LVMH.
Still, the company founded in Milan by Miuccia’s grandfather in 1913 is weathering China’s luxury crisis better than many of its competitors. Its Hong Kong-listed shares are up about 30% this year, while Kering shares are down more than 40% and LVMH is down about 18%.
Prada SpA’s revenue increased in the third quarter, thanks to its Miu Miu brand, which more than doubled sales. During the period, both labels remained among the top three “hottest” names in a ranking compiled by Lyst Index, which tracks searches and mentions on social media. Bernstein analyst Luca Solca said Miu Miu has the potential to further double annual sales to around 2 billion euros.
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Lorenzo has played a crucial role in Prada’s performance in recent years, according to people familiar with the group’s internal employees. But the succession strategy is broader than just an ownership transfer, with the scion being flanked by trusted luxury veterans.
Raf Simons – the former creative director of LVMH’s Christian Dior – was appointed co-creative director of Prada’s eponymous brand in 2020. There is also a new management team at the group led by CEO Andrea Guerra and vice president Paolo Zannoni, and a organizational in which its brands are managed as separate units with their own managers.
Prada moves are not common in Italy. Many local businesses were founded as the economy grew in the 1960s and 1970s. Some patriarchs like Giorgio Armani are now in their 90s. Leonardo Del Vecchio – founder of EssilorLuxottica SA, owner of Ray-Ban – passed away in 2022 with heirs still divided over succession issues two years later.
In many business families, discussions about handing over to the next generation are taboo, leaving you insufficiently prepared and opening the door to disputes. John Elkann, head of the Agnelli family, who founded the Fiat automaker, is still fighting in court with his mother, Margherita Agnelli. Miuccia and Patrizio, however, are committed to ensuring that “pradaity” outlives them.
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Although Miuccia inherited the store in central Milan, she was an unlikely fashion expert. A committed leftist and feminist activist in the 1960s, she broke with traditions from which she benefited. This iconoclasm helped develop innovations like the Prada nylon backpack in the 1980s. Her “ugly chic” collections made Miuccia one of the most influential designers in the world.
She also knows how and when to control and collaborate to maintain links with youth culture. Maintaining this freshness will be fundamental to Prada’s future.
Miuccia is “very smart in choosing to work with people who reflect her sensibility, but who also belong to a younger generation,” said American designer Marc Jacobs.
