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Giorgio Armani Profits Rise 20% in 2012

The Milan-based fashion group logged another year of gains in profits and revenues, led by a 39 percent jump in China.

MILAN — There’s no trace of an economic slowdown at Giorgio Armani SpA, which is expecting the momentum to continue this year.

The Milan-based fashion group logged another year of gains in profits and revenues in 2012, led by a 39 percent jump in China.

In the year ended Dec. 31, operating profits climbed 20 percent to 339 million euros, or $434 million, compared with 281.8 million euros, or $391.7 million, in 2011.

Sales rose 16 percent to 2.09 billion euros, or $2.68 billion, compared with 1.8 billion euros, or $2.5 billion, in the previous year.

Dollar amounts are converted at average exchange rates for the periods to which they refer. Armani does not reveal net profits until later in the year, when the company publishes its annual report.

“The excellent results achieved in 2012 confirm the quality of leadership that we have here at Armani,” said the designer, who is chairman of the fashion house he founded almost four decades ago. He underscored how the figures are “the result of a strategy focused on the constant search for quality, an approach that over the years has built an extraordinary level of brand awareness and loyalty.”

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The group touted the third consecutive year of organic growth at retail and wholesale and said all labels contributed to the 2012 performance, in particular the Giorgio Armani and Emporio Armani brands. The designer noted that the company has “continued to enjoy a strong relationship with [its] wholesale partners.”

Last year, group revenues, including licensed products at retail value, reached a record 7.4 billion euros, or $9.47 billion, compared with 6.73 billion euros, or $9.35 billion, in 2011.

“Data collected for the year 2013 are very positive so far,” Armani told WWD. “Strategies adopted on many fronts are showing important and significant results. It is too early to make predictions, of course, but I expect the positive trend to continue for this year. My energy as a designer and entrepreneur are entirely channeled in this direction.”

The designer added that he looked “ahead with confidence,” and that the positive figures in the first quarter of 2013 help confirm that the group’s “commitment to consistency, continuity and long-term strategy is the right path to follow.”

In 2012, all markets showed double-digit growth, including Europe, despite the continent’s economic woes. Europe was the biggest market for the group, with sales of 1.02 billion euros, or $1.31 billion.

The Far East followed, with sales of 512 million euros, or $655.3 million. At the end of May last year, the group held a celebratory event in Beijing, with a runway show and party called “One Night Only in Beijing,” which marked more than a decade of Armani in China, featuring a Mary J. Blige concert and drawing celebrities such as Tina Turner and film stars Fan Bingbing and Michelle Yeoh. At the time, Armani told WWD that he believed growth in China was to be attributed to “the sophisticated linearity” of his style, “the idea of a nonostentatious elegance that speaks in a direct and clear way to the sensibility of the Chinese public.”

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North America posted sales of 355 million euros, or $454.4 million. The Rest of the World area reported revenues of 203 million euros, or $260 million.

The group’s brands include Giorgio Armani Privé, Giorgio Armani, Emporio Armani, Armani Collezioni, AJ Armani Jeans, A|X Armani Exchange, Armani Junior and Armani/ Casa.

Capital expenditure totaled 158 million euros, or $202.2 million, an 80 percent increase compared with the previous year. In 2012, the group continued to invest in strengthening and expanding its distribution network, which today counts 2,203 stores, while also upping integration and efficiency of the supply chain. Last year, the company opened 104 freestanding stores and retail sales rose 19 percent.

Armani characterized the group’s strategy as “increasingly global,” and noted that stores were opened in Europe, where the group’s “willingness to invest remains strong,” despite the difficult economy. He cited the Giorgio Armani unit on Avenue Montaigne in Paris that bowed in January during couture week “amongst the most significant” openings, “the new unique and special concept store, conceived in harmony with the architecture that houses it, that is sought after like a couture gown.” Armani also mentioned Spain, “a recognition of a market that is once again gaining speed”; Canton Road in Hong Kong, “a lively area,” and the concept store in Kuwait.

The designer will unveil a new and expanded Giorgio Armani store in Rome’s central and luxury shopping street Via Condotti next month. “It’s a sign of confidence in Italy’s recovery with which I want to convey an important message. The opening will also host a special event that will take place at the Palace of Italian Civilization, which I hope will be remembered,” said the designer. The “Eccentric” exhibit the designer staged at his Tadao Ando-designed headquarters in Milan in September will be adapted to Rome for the occasion. In Milan, the exhibit comprised 40 looks, including a silk taffeta jacket with embroidered pineapples inspired by a Gloria Vanderbilt dress; the famed getup designed for Lady Gaga in laminated metallic pieces, and a selection of accessories, from 1985 onward, to show the whimsy in Armani’s designs.

The company said it closed 2012 with a cash position of 565 million euros, or $723.2 million, compared with 642.8 million euros, or $893.5 million, in 2011, dented by capital expenditure. “In a company like Giorgio Armani, capital expenditure represents an invaluable leverage for innovation and growth,” said Armani.