Prada SpA has begun the process of handing over leadership to the next generation of its controlling family. In the meantime, the Italian luxury company will bring in its first outside chief executive officer.
After signaling a year ago that a change was likely, Prada said on Tuesday that it would appoint former LVMH Moet Hennessy Louis Vuitton SE executive Andrea Guerra to be CEO. He succeeds Miuccia Prada and Patrizio Bertelli, who transformed the company from a leather goods business to one of the world’s leading independent luxury houses.
Miuccia Prada will remain creative director of Prada and a member of the board, while Bertelli will become chairman. Paolo Zannoni, current chairman, will become executive deputy chairman.
After clarifying the creative role—the company named Raf Simons as co-creative director alongside Miuccia Prada—in 2020, it is now bringing the same certainty to the CEO position.
Guerra’s appointment is a stepping stone toward the eventual handover to Lorenzo Bertelli, eldest son of the outgoing family CEOs. The company said Guerra’s appointment would “ease the succession of Lorenzo Bertelli, the future leader of the group.” Guerra, who is also a former chairman of privately owned Eataly SpA, will be a safe pair of hands until 34-year old Bertelli is ready to take over. The scion has made his mark on the house since joining five years ago, bolstering its online and sustainability credentials. But it was clearly too early for him to step up.
But the change is not without risk.
Outside CEOs have not always been successful at family-controlled companies. For example, Ralph Lauren Corp. parted with Stefan Larsson in 2017 after the eponymous founder handed over the reins just two years earlier. The US lifestyle brand has since hired another outside CEO, Patrice Louvet, who remains at the helm.
There is a good chance such a rupture will be avoided at Prada. Not only is Guerra hugely experienced, he has held senior roles at companies with significant family shareholdings, including being CEO of Luxottica Group Spa for a decade between 2004 and 2014, when it was controlled by the late Leonardo Del Vecchio. The new CEO has been brought in by the family, which has known him from his Luxottica days, when the company began to produce Prada’s eyewear.
Still, he’ll have little room for error. Prada is enjoying a Gen-Z revival, but it must continue its turnaround, for example, translating its newfound popularity into lucrative handbag sales to lift profitability. And the luxury backdrop is poised to become more challenging, with the US slowing and China only recently easing some Covid restrictions.
The changing of the guard indicates that Prada is intent on maintaining an independent future. But any stumbles could leave it vulnerable to a predator such as LVMH or Kering SA.
If all goes to plan, Guerra steers Prada through the next stage of its reinvention and then hands over to Lorenzo Bertelli, then the group will have navigated a tricky transition. It would look like a smart evolution and help to justify Prada’s valuation premium to most of its rivals.
After all, sometimes taking time to assemble the right outfit can create the most elegant looks.
Andrea Felsted is a Bloomberg Opinion columnist covering consumer goods and the retail industry. Previously, she was a reporter for the Financial Times.