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In the context of a luxury slowdown, it certainly stands out for a brand to more than double its quarterly revenue. In the third quarter, Miu Miu did just that: sales grew 105 per cent in the period ending 30 September to €324 million, and are up 97 per cent to €854 million in the first nine months of the year.
Within the Prada Group, the Prada brand, while experiencing slower growth, is still much larger than its little sister. Miu Miu makes up about a quarter of revenues as of 2024, up from 15 per cent in 2023. It’s something the group is keenly aware of: “I always want to remind you that even if we have this stellar growth, the absolute numbers are not big, so we have a journey to do,” group CEO Andrea Guerra told investors and analysts on a call on Wednesday. The group has ambitions to continue its growth into the future, Guerra said, adding that the team is “working day and night to make this growth sustainable”.
It might not be so easy.
Why is Miu Miu spiking?
Guerra highlighted that Miu Miu’s turnaround has been in the making for four years and that there is no immediate plan to change the strategy, overextend the brand or look for “shortcuts”. That strategy has included leaning into a youthful brand persona, creating ‘It’ items and working micro-trends to the brand’s advantage. Before, the brand was dwarfed by the Prada brand’s growth, analysts say, and had a much smaller and more specific customer base.
Nevertheless, Guerra said: “I would be lying if we said that we predicted to double our business year-on-year. It’s part of this industry. Sometimes there is a secret recipe that makes what you think you’re doing well turn into something else — so yes, it has been beyond our expectations.” He also highlighted that the brand’s “cultural relevance” and “credibility in terms of our message to society, to the world, is even more important than our financial numbers”.
Insiders and analysts break down what’s behind the brand’s rise after it posted an 89 per cent sales spike in the first quarter.
It’s not easy to pinpoint a single reason why the brand has hit the mark, analysts say. “Their styling is well executed, their marketing campaigns are well thought out and creative (take art and film, for example), several products went viral (like the micro-skirt) and many are widely adopted by influencers. I wouldn’t say they are inventing the wheel, but I think they execute very well and benefit from some luck, which is always the case with consumer appeal,” says Jelena Sokolova, senior equity analyst at investment insights firm Morningstar.
“It is a case of product and communication hitting the target and providing consumers with a new perspective. This has started to work in China, and it has then spread to the rest of the world,” adds Bernstein luxury goods analyst Luca Solca.
Too good to last?
Sokolova says she doesn’t expect the current growth rate to be sustainable. She expects Miu Miu to maintain about a quarter of the group’s revenues and forecasts a normalisation in its growth rate from 2025 to the high to mid-single digits. Solca adds: “We are ahead of consensus on fiscal year 2025, and the Prada brand is decelerating. We expect Miu Miu’s [sales growth percentage] to move to the high 20s.”
“I’m somewhat wary of very sharp growth trajectories for brands, as something that is extremely popular can also make people tired quickly,” says Sokolova. “Managing tremendous success without falling victim to it is a challenge. Probably ways to avoid it is diversifying product ranges, ensuring that no product is overly represented and stretching pricing (as management suggested) while the brand is ‘hot’. Arguably, Miu Miu is a small brand with lots of room for growth, however, it is also less known by the consumers compared to Gucci or Prada, which could make the waning popularity more painful.”
The key is to keep innovating in order to retain the attention of the fickle luxury consumer. “The only recipe I know that would guarantee success for a brand is to continue to change in the right direction,” says Solca. “For small brands, this has proven a major challenge in the past. More of the same is guaranteed to get you déjà vu pretty soon.”
Next on Miu Miu’s agenda is naming its new CEO (expect the announcement in one to three months, Guerra said) and growing its retail presence by sizing up its existing stores and opening new ones in untapped markets. “This is a management team focused on continuing to scale up Miu Miu, and a confirmation of a broadening of the geographical appeal of the brand across a full breadth of categories remains a key consideration when judging the potential to build further on the remarkable progress,” Jefferies equity analyst James Grzinic said in a note.
There are risks to consider, though. “Retail presence enlargement probably makes sense to better service large numbers of customers, but it of course comes with a risk should the appeal fall short, as retail costs are largely fixed,” says Sokolova.
The future is hard to predict, analysts agree. “I would say it is good while it lasts, but not a very reliable growth driver for the future, given the lesser established nature of this brand and quite volatile history of performance,” Sokolova says. “I feel it is affected by a favourable fashion cycle to a great extent, and fashion cycles always go both ways.”
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