By Luisa Zargani

MILAN — Citing higher margins and synergies from recent acquisitions, Armani Group Tuesday reported a double-digit increase in first-half profit and said it expected "another year of solid growth."

In the period ending June 30, earnings before interest, taxes, depreciation and amortization grew 11 percent to $126.2 million while earnings before interest and taxes rose 10 percent to $94.2 million, compared with the same period last year.

Sales grew 5 percent to $634.1 million from $604 million the previous year. Dollar figures have been converted from the euro at current exchange rate.

"Following the record year of growth in 2001, we have started 2002 in an extremely positive way with both revenue growth and profitability exceeding the industry average," said Giorgio Armani, president and chief executive of the group, in a statement. Armani said the company has now begun to "reap the benefits" of the $543.8 million invested over the past four years in its retail network, strategic acquisitions and infrastructure development.

On the retail front, during 2002 the group has expanded its network with 29 new stores. In particular, Armani will open a 32,400-square-foot multibrand store in Hong Kong next month. The Chater House is the second megastore, after the opening of the three-level Armani/Via Manzoni store in Milan two years ago. Armani said the store in Hong Kong underscores "the commitment" of the group to China, "a market we are approaching at the most appropriate time." Armani is also renovating 12 stores worldwide: the Emporio Armani boutique on New York’s Madison Avenue, for example, reopened in July, and the Emporio boutique in Los Angeles will reopen next spring.

Two new Armani Casa stores will open this fall, one in Milan on Sept. 27, during fashion week, and the other in Moscow at the end of October. The Armani Casa store in Milan will be located in Via Durini, in the former Emporio Armani space. Over the year, 20 Armani Casa corners opened in specialty home furnishings stores around the world. The designer’s home line was launched two years ago. This year, Armani also expanded the Armani Collezioni brand, launching a new retail concept and opening new Collezioni boutiques in Milan, Paris and Frankfurt."Our global retail expansion and renovation program continues at a fast pace, helping to reaffirm the image of the brand and reinforce the distribution of our diverse product lines," said Armani.

In the statement, Armani noted it had completed the acquisitions of Deanna SpA and Guardi announced earlier this year. Deanna is a knitwear business based in Reggio Emilia, Italy, which started producing knitwear across the designer’s collections for spring-summer 2003. Guardi controls four shoemaking companies the designer will now employ to expand its footwear business. The first collections produced by Guardi will bow for spring-summer 2003.

In 2002, the designer launched an Emporio Armani Jewelry collection, which will be available in stores around the world in November. The line is produced by Fossil, the licensee for Emporio Armani watches. This year, Armani consolidated its fragrance business with the launch of two new fragrances, Armani Mania for men this spring, and Sensi, a new women’s fragrance. Sensi will be launched in the U.S. in spring 2003, while it will be available in Europe and Asia starting this fall.

Armani said in the statement that the company is "quickening the rollout program" for its cosmetics line, which was launched last year in the U.S. "The line will have a dedicated store in the Hong Kong Chater House store and, in this coming season, we will have an exclusive space on the cosmetics floor in London’s Selfridge’s," said Robert Triefus, the group’s corporate vice president of worldwide communications in a phone interview. Triefus said the cosmetics line was launched in Tokyo over the last two weeks and will be introduced to the Hong Kong and Australian markets this fall. "We have a very high-end strategy for this line, with a very limited distribution, where we are assured an exceptional visibility and a significant presence," said Triefus. In the U.S., the line is available at Saks Fifth Avenue and Neiman Marcus.

In the statement, the designer expressed satisfaction with the firm’s results, which, he said, "show that the group is now stronger than ever, and that it is growing despite the challenging current business environment."

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