As Miuccia Prada made final adjustments to her most recent runway show during Milan Fashion Week last month, her husband and co-chief executive officer, Patrizio Bertelli, famously hands-on in so many aspects of the business, stayed away. “Even if you know all the ingredients, a good cocktail should be mixed by the person who’s actually in charge,” he said from the calm of the company’s headquarters, whose strict minimalist renovations gave it the white walls and polished concrete floors of an art gallery. There’s even a 100-foot spiral slide by German artist Carsten Höller shooting out into the courtyard.
Across town, Prada and their 30-year-old son, Lorenzo, who joined Prada SpA last year to help run social media, were anything but calm, rushing around the family’s contemporary art foundation, Fondazione Prada, where the show would introduce the 2019 spring-summer line. Guests would soon start arriving, wearing $2,550 Prada banana-print dresses and $1,850 oversize hot-pink Prada foam vests. As the show began, Sofia Coppola sat next to Spike Lee, who wore orange socks that matched his round orange spectacles. (Lee would later inaugurate the Fondazione’s film season.) To the thump of a techno soundtrack, the models strutted out wearing thick studded hair bands, satin A-line skirts, tie-dye prints, and plunging necklines. The next day fashion critics described the collection as a subversive commentary on bourgeois fashion. The collection “put Prada back at fashion’s pinnacle,” declared Vogue’s Suzy Menkes, the doyenne of fashion criticism.
Prada and Bertelli are arguably the luxury industry’s most prominent, longest-running partnership. Prada drives the design; Bertelli manages the business, which in 2017 produced revenue of €3.1 billion ($3.6 billion). Prada is finally emerging from three years of falling profits set off by a slowdown in China and compounded by a failure to recognize that the internet had fundamentally transformed the luxury business. “We made a mistake,” Bertelli says, tapping a table in his office with a black-and-red Prada pencil. “We should have launched our digital network much earlier. Now we’re working on it, building it, improving it, and you can see the results.”
Prada has embarked on a comeback, with sales growing 9 percent in the first half of 2018. But rivals such as the French conglomerates Kering SA, owner of Gucci, and LVMH Möet Hennessy Louis Vuitton SE rebounded from their own slumps much earlier and surged ahead last year. Prada’s stumble and slow recovery are all the more remarkable because it always had a knack for being one step ahead. Miuccia’s penchant for “ugly chic” designs—clashing patterns and frumpy pleated skirts that somehow were indelibly elegant—made her a feminist icon. And Uma Thurman, Kirsten Dunst, and other stars gave her more playful secondary line, Miu Miu, a Hollywood glamour that attracted women with a brainy love of fashion. Even with the company’s recent wobble, Prada remains the most powerful woman in luxury since Coco Chanel.
“Her influence is hard to overstate,” says Yasmin Sewell, vice president for style and creative at Farfetch, the luxury e-commerce platform. “By the time people have caught on to what Miuccia is doing, she’s already moved on to the next thing. She is, without question, the most forward-looking fashion designer.”
The fashion industry has radically changed in the past few years. Instead of walking into a store and buying a bag after reading about it in a magazine, consumers are more likely now to spot it on Instagram through a fashion blogger, research it on a brand’s website, Google who sells it, and then maybe buy it online or in the store. Some competitors have also reshuffled their creative teams, with dramatic results, with Gucci as the standout example. As recently as 2014, Prada produced more revenue than Gucci. But now Gucci is almost twice as big, thanks to the meteoric rise of Alessandro Michele, creative director since 2015. Now everyone is looking for the next Gucci, the next brand ripe for a rapid turnaround.
Like some of their competitors, Prada and Bertelli—70 and 72, respectively—are navigating a changing industry at the same time as they confront the issue of succession. Bernard Arnault, 69-year-old CEO of the world’s biggest luxury goods maker, LVMH, has given four of his children prominent roles in the company. François Pinault, the octogenarian founder of Kering, has handed the reins to his son François-Henri. By bringing in Lorenzo, Prada and Bertelli are following their lead.
As to someone other than Prada designing Prada … no. “We keep hearing questions about how and when and if we’re going to hire a new designer,” says Bertelli, who with his wife owns 80 percent of the company. “It’s bad taste. She’s the creator, the founder of Prada. It’s also a total lack of respect. Are we still assessing people looking at their birthdates?”
After the show finished and the crowds at the Fondazione thinned and meandered outside to swig cucumber cocktails, Prada, in a white shirt, a navy skirt, and strings of white and gray pearls, described her latest collection in political terms. A daughter of Milan’s elite, Mrs. Prada, as she’s always called inside the company, has long used her brand as a platform for her philosophical and aesthetic concerns—throwing rocks from the inside at the windows of Italian elegance and gender roles. “On the one side, there’s the need and hope for freedom, nakedness, fantasy; and then on the other side, extreme conservatism coming in,” she said. “The struggle between the two was the basis of my work.”
Lorenzo wore jeans and a blue-and-white-striped button-down shirt to the show, setting him off from the mostly glammed-up guests. He’d been working earlier in the day on Prada’s rollout of the collection on Instagram, which included immediate posting of images of the collection and videos of model-of-the-moment Kaia Gerber getting ready backstage. A former professional rally car driver with a degree in philosophy, Lorenzo is no stranger to social media—though he hadn’t used it before to sell clothes. His social media profile suggests he’s inherited more of his mother’s punk spirit than his mild demeanor lets on: His Twitter handle is @fuckmatie37, named after his rally team, with the tag line “born to be in contro-sterzo”—that is, counter-steering. “I’m superhappy,” Prada says about her son joining the company. Bertelli says Lorenzo is starting out in communications before trying other parts of the business, with a view to running the company someday, “if he wishes.” Lorenzo declined to comment for this story.
Prada has dismissed the company’s rough sales patch as irrelevant. “I don’t want to be judged by sales,” she told a scrum of reporters last year in Milan as the company was continuing to report declining revenue. “My life is so much more important than sales. We’re not really a commercially driven company.”
It’s not the sort of thing the co-CEO of a publicly traded company with billions in annual sales is expected to say, but it’s in character. Prada’s grandfather founded the company, and in her youth she rebelled. She got a doctorate in political science from the University of Milan and, like many of her compatriots in the 1960s, joined the Communist Party. (Unlike many of her comrades, she went to protests wearing Yves Saint Laurent.) She trained as a mime. She described her first collection, in 1988, as “uniforms for the slightly disenfranchised.”
A more commercially driven company might not have built a factory like the one Prada and Bertelli opened in 2015 in Valvigna, in the lush Tuscan countryside, as a hub for prototyping, quality control, and leather cutting. Inside the 90,000-square-meter (968,752-square-foot) facility, where glass and concrete are mixed with metal trellises covered in grapevines and mulberries, row after row of humidity-controlled cabinets house a decades-long archive of handbags and shoes, organized by shape and color. On a tour in July, architect Guido Canali, a favorite of Bertelli and Prada’s, pointed to walls he created to “protect workers from the invasive banality of nearby parking.”
Before the tour, Bertelli waved away questions from reporters about the labor conditions at some of his external suppliers in Italy, which still make the majority of Prada’s products. He wasn’t going to “show up at midnight” at a workshop to see “whether or not people are working,” he said dismissively. He said people had called him a megalomaniac for spending money to build high-tech factories in the Italian countryside. “People spend so much waking time there, 8 to 10 hours, that they should be allowed to spend time in a pleasant place,” he said. “We can afford it.”
Not all shareholders agree. One major investor, Harris Associates, sold its almost 5 percent stake last year because of the company’s continued decline in profitability. Prada’s stock price has gained 5 percent this year, but it’s still down 25 percent since the initial public offering seven years ago, a period when the global luxury market experienced an unprecedented boom.
Justin Leverenz, director for emerging-market equities at OppenheimerFunds, which owns 5 percent of Prada’s shares, has been meeting Prada and Bertelli regularly for years. He praises the company for fixing its digital strategy but says it still needs to shrink its network of 626 directly owned stores in roughly 70 countries. There are Prada stores in more than 20 cities in China, including one in the southern Chinese city of Nanning, not exactly a land of riches: The gross domestic product per person in Nanning is $8,375, half of Shanghai’s. Prada has almost as many stores worldwide as Louis Vuitton, luxury’s biggest and most recognizable brand, which has sales more than three times higher.
“Prada has a store network that’s way too large for the realities of today’s market,” Leverenz says. “It’s not just about profitability. In the luxury goods industry, you want the illusion of scarcity. You want people to think this is such a special brand that they will fly to Beijing or Shanghai or Hong Kong to buy it.”
Prada has slowed the pace of store openings, but Bertelli says physical stores have taken on a new relevance today. “How many people said two years ago that having a chain of stores was a cost that would not be necessary anymore? So why are so many malls opening now?” he asks. “If you aren’t in a new mall, you feel left out of the luxury market.”
Miuccia and Bertelli sometimes sound as if they’ve accepted the digital revolution in fashion but don’t fully believe in it. Asked last October after her Miu Miu show in Paris whether she’s ever bought anything online herself, Prada responded with an emphatic “No!”
One thing about constantly redefining fashion: You can be too early. In 1997, Prada started the luxury sportswear line Linea Rossa, with its distinctive rubber red-stripe logo and technical fabrics. It was put on the back burner in the late 2000s. Two years ago the athleisure trend came roaring back, and rival brands began adding luxury sneakers aimed at millennials: Gucci unveiled its Rhyton sneaker, a bulky ’80s-style shoe, last year with a price tag of €705, and Balenciaga released its similarly thick-soled Triple S model for €695.
In September, Prada brought back Linea Rossa, this time with lots of neon. “We were the first ones to explore this territory, but I get bored easily and I’m interested in what’s next,” Miuccia says. “I felt the urge to bring it back to life because it felt very relevant to the moment.” The delay meant Prada was late to catch a younger generation willing to splash out on high-priced fashion. The figures tell the story: In 2017, consumers younger than 35 accounted for 85 percent of the growth of the luxury market, with social media playing a key role, according to Bain & Co. “They sort of missed this fusion of streetwear and luxury goods,” Leverenz says. “Prada should have owned this. It should not have been the Gucci sneaker.”
What Prada didn’t miss was the rise of China, which has underpinned most of the growth in the luxury industry over the past decade. During the 2000s, Prada’s garish prints of bananas, flames, and comic books set the agenda for fashion-forward shoppers, while sleek handbags for more mainstream consumers, such as Prada’s best-selling Galleria model, which retails for $2,250, flew off the shelves as the company opened stores aggressively in China. During Prada’s heyday in 2010, its sales in Greater China alone grew 69 percent. Prada did its 2011 IPO in Hong Kong. And when the company returned to growth earlier this year, China remained the fastest-growing market, with net sales surging 17 percent in the first half of 2018.
For years, Prada offered a limited collection of shoes and leather goods online in Europe, the U.S., and Japan. Last year it began rolling out e-commerce sites country by country, and in December it finally began selling its full line through its own website in China. It’s also made itself more visible on Instagram, where it now has 17 million followers. Prada’s online sales accounted for 5 percent of revenue (or about €77 million) in the first half of 2018; it’s aiming to get that up to 15 percent.
The luxury industry as a whole is expected to grow from 6 percent to 8 percent in 2018, according to a study by Bain and the Italian trade group Altagamma. By that measure, Prada is keeping just ahead of the overall market. Miuccia, ever the rebel, refuses to explicitly target millennials for growth the way her rivals do or churn out more conventional clothes to boost sales. “Obvious beauty really is something I physically can’t stand,” she said after her Miu Miu show in Paris, where silk cocktail dresses had been stonewashed and ornamented with outsize crumpled bows. “When I am in front of a beautiful dress there is something in me, that I can’t stand it. I have to destroy it!”.
Stephanie Baker e Robert Williams, Bloomberg