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Valentino Net Up in ’05

Valentino Fashion Group SpA posted a double-digit jump in 2005 profits, thanks to growing profitability at its Hugo Boss and Valentino brands.

MILAN — Valentino Fashion Group SpA posted a double-digit jump in 2005 profits, thanks to growing profitability at its Hugo Boss and Valentino brands.

Valentino FG said net profits for the 12 months ended Dec. 31 rose 56 percent to 90.5 million euros, or $113.13 million at average exchange rates for the period, while sales advanced 11.4 percent to 1.7 billion euros, or $2.1 billion. The company noted that sales in the first two months of 2006 rose 11 percent and forecasted that sales later this year will continue to grow at that pace.

Valentino FG was formed last July when Marzotto SpA spun off its fashion assets and listed the new group on the Milan Stock Exchange, so all full-year 2005 and 2004 figures are pro forma. For the July through December period, the company posted a net profit of 66.7 million euros, or $80.7 million, on sales of 914.5 million euros, or $1.1 billion.

The firm’s biggest brand, Hugo Boss, saw its revenue advance 12.1 percent for the year to 1.3 billion euros, or $1.6 billion. (Hugo Boss AG reported its full results Wednesday; see below.) Sales at Valentino rose 22.9 percent to 209.1 million euros, or $261.4 million. Revenue from other brands, including that of Marlboro Classics, grew 2.3 percent to 266.3 million euros, or $332.9 million.

Rising profitability at Hugo Boss and Valentino boosted the group’s operating profit 14.8 percent to 195.2 million euros, or $244 million. A lower tax rate further increased the group’s net profit.

Margins grew despite Valentino FG’s increased spending on advertising, marketing and other promotions. Those costs rose 28.6 percent to 128.1 million euros, or $160 million, for the year.

Investments rose 34.3 percent to 95.1 million euros, or $118.9 million, as Valentino FG spent more to expand its retail network and logistical operations. The firm increased its directly operated store count by 81 units to 208 boutiques, thanks to new openings and buyouts of franchisees.

Europe is the company’s biggest market by far. Sales in Italy rose 4.7 percent to 188.1 million euros, or $235.1 million, while those in Germany advanced 8.9 percent to 324.2 million euros, or $405.3 million. Revenue from the rest of the continent grew 10.9 percent to 670 million euros, or $837.5 million.

Elsewhere in the world, sales in North and South America rose 12.3 percent to 295.1 million euros, or $368.9 million, and those from Asia grew 31.8 percent to 164.5 million euros, or $205.6 million.

Valentino FG reduced its net financial debt to 333.5 million euros, or $416.9 million, as of Dec. 31, compared with 422.7 million euros, or $524.1 million, at the end of 2004.