Prada to Reduce Outlets, Simplify Versace Brand Offerings

• Versace has one of the industry's highest outlet exposures, with over 30% of sales from discounted channels and 62 brick-and-mortar outlet stores
• Versace reported 684 million euros in revenue for 2025 and is expected to see mid-single-digit sales decline in 2026, with operating losses projected to remain in the two-digit range
• Prada will shut down Versace Jeans and other sub-brands while relaunching the top-tier Atelier Versace line focused on haute couture, with profitability improvement expected from 2027

Prada to Streamline Versace Operations, Reduce Outlet Presence

Key Strategic Changes:

Prada is implementing a major restructuring of its recently acquired Versace brand, focusing on elevating the label and reducing discounted sales channels. The luxury group will shut down Versace Jeans and all other ready-to-wear sub-brands while relaunching the premium Atelier Versace line with emphasis on haute couture.

Leadership and Timeline:

Pieter Mulier, currently at Richemont-owned Alaia, will join as Versace's new creative director in July and present his first collection in early 2027.

Outlet Reduction Strategy:

Prada plans to gradually close Versace's extensive outlet network and curtail discount campaigns. Currently, Versace has significant outlet exposure, with over 30% of sales coming from this channel according to Morgan Stanley. The brand operates 62 physical outlet stores, compared to 52 at Ferragamo and 54 at Burberry.

Financial Impact:

The Versace acquisition has pressured Prada's profit margins throughout 2025 and will continue affecting results in 2026. Versace posted an operating loss in 2025, and Prada aims to limit the 2026 operating loss to a "two-digit figure" (implying tens of millions of euros).

Versace generated €684 million in revenue in 2025, with Prada projecting a mid-single-digit sales decline at constant exchange rates for 2026. Finance Chief Andrea Bonini indicated improvement is expected from 2027 onwards, as the group seeks synergies from integrating the former rival brand.

Market Implications:

The strategy signals Prada's commitment to luxury positioning over volume, prioritizing brand equity and full-price sales despite near-term financial headwinds.