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Ferré Turnaround Buoys IT Holding

MILAN — Lower interest payments helped IT Holding report a significant hike in first-half pretax profits, which grew to 20 million euros, or $24 million, from 9 million euros, or $10.8 million, in the same period last year. (Dollar figures have...

MILAN — Lower interest payments helped IT Holding report a significant hike in first-half pretax profits, which grew to 20 million euros, or $24 million, from 9 million euros, or $10.8 million, in the same period last year. (Dollar figures have been converted from the euro at current exchange rates.)

Over the past nine months, IT Holding has been focusing on its more profitable brands. The firm, which is listed on the Milan stock exchange, in January sold its fragrance division and in April disposed of the Gentryportofino and Romeo Gigli brands — a move that has triggered a $54 million lawsuit by Gigli. Tonino Perna, chairman and chief executive officer of the group, has increasingly been shifting his attention to the Gianfranco Ferré and Malo businesses, which IT Holding controls along with Exté and clothing manufacturer Ittierre, which produces D&G, Versace Jeans Couture and Versus, Just Cavalli and C’N’C Costume National.

In a statement issued Monday with its first-half results, IT Holding said the turnaround of the Ferré brand has been completed and that Ferré sales in the period grew 16.2 percent to 61.9 million euros, or $74.2 million. Ferré now accounts for 17.7 percent of consolidated group sales, which in the first half increased 13 percent to 350.6 million euros, or $420.7 million. The figure does not take into account 2003 sales derived from the fragrance division and the Gigli and Gentryportofino brands. Group sales would have grown 14.5 percent at constant exchange rates.

In the period ended June 30, earnings before interest, taxes and amortization grew 12 percent to 44.7 million euros, or $53.6 million. Operating profit, or earnings before interest and taxes, grew 31.4 percent to 22.8 million euros, or $27.3 million.

IT Holding said sales in its clothing and accessories division grew 9.9 percent to 303.5 million euros, equivalent to $364.2 million. The clothing and accessories division now accounts for 86.6 percent of group sales.

Perna said the growth in clothing and accessories stemmed from the “success of the Ferré brands [Gianfranco Ferré and the younger line GF Ferré].” The Ferré lines also helped boost the eyewear division, where sales grew a hefty 52.9 percent to 44.5 million euros, or $53.4 million. Eyewear now accounts for 12.7 percent of group sales.

The devaluation of the dollar against the euro caused sales in the U.S. to drop 1.9 percent compared with last year. The U.S. accounts for 10.2 percent of sales, or 35.6 million euros, equivalent to $42.7 million.

Perna said a more “balanced financial structure” remains a priority. After the partial, 12.5 percent buyback earlier this year of the 200 million euro, or $240 million, bond that helped finance the acquisition of Ferré in 2002, Perna plans to restructure IT’s debt by the end of the year. The bond expires next May. As of June 30, the group’s debt totaled 288.7 million euros, or $345.6 million.

— Luisa Zargani