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MILAN — Giorgio Armani is riding the luxury bounce.
This story first appeared in the May 24, 2011 issue of WWD. Subscribe Today.
Lifted by gains in China, net profits at Giorgio Armani SpA jumped 80 percent to 161 million euros, or $212.5 million, in fiscal 2010, compared with 88.8 million euros, or $123.4 million, in 2009. The company also attributed the performance to increased full-price sales in both its retail and wholesale channels, “extreme attention to costs” and gains in volumes and margins derived from licenses.
Sales rose 4.6 percent to 1.59 billion euros, or $2.1 billion. In 2010, the group’s revenues, including licensed products, totaled 6.02 billion euros, or $7.95 billion.
Dollar figures are converted at average exchange rates for the periods to which they refer.
Chairman Giorgio Armani described 2010 as “very positive” for the company, which showed “its capacity to react promptly to the difficulties originating from the crisis that affected both the fashion and luxury sectors.”
The designer said the company did not lose its focus on “high-quality distribution” and meeting rapidly changing consumer demand during the difficult economy.
“A portfolio of different brands capable of responding to evolution in the marketplace and the solidity of our business model, which is based on strong, long-term partnerships with our wholesale clients and important licensees, has enabled this strategy to be even more effective, while also providing the foundations for further expansion in the future,” said the designer. “We will therefore continue to develop and strengthen our brand equity and our global distribution network to fully exploit the potential of the whole portfolio of Armani brands.”
And the current year has maintained the momentum, with fall orders up 20 percent compared with the same season in the previous year.
In 2010, earnings before interest, taxes, depreciation and amortization climbed 47.5 percent to 321.6 million euros, or $424.5 million.
The company last year invested 91 million euros, or $120 million, a 42 percent increase over 2009, mainly aimed at further expanding its store network. In 2010, Armani opened 81 new stores across all his brands. There are 650 stores in 46 countries, directly owned and franchised.
Retail sales in directly managed stores rose 10.4 percent, boosted in particular by Asia. Sales in China rose 36 percent. Last year, three Giorgio Armani stores were opened in China: Emporio Armani units were unveiled at the Peninsula Hotel on Shanghai’s legendary riverfront, The Bund; in Hong Kong, at the Elements mall, and in Beijing. An additional Emporio Armani venue opened at Shanghai’s Hongqiao International Airport in October as part of the firm’s travel retail expansion.
In November, the company launched an Emporio Armani online store in China, operated by Italian e-tailer Yoox, becoming what is believed to be the first Western fashion brand to open an official e-commerce site in the country. The designer said last month he was canceling a celebratory event to be held in Beijing on May 28 to mark his company’s more than decadelong presence in China out of respect for the Japanese people recovering from the earthquake in March.
The firm said Monday that, “given the strong development of our brands on the Chinese market, there will not be one single event to reprogram in Beijing in the future, but multiple ones in various cities.”
The designer has an established business in the region. Armani’s first signature boutique opened in Beijing in 1998 and, as of March, in Greater China, the company counted 13 Giorgio Armani boutiques, 51 Emporio Armani stores, 62 Armani Collezioni stores, 31 AJ Armani Jeans stores, seven Armani Junior stores, 33 A|X Armani Exchange stores and six Armani Casa stores in 43 cities.
The 81 stores opened last year included Giorgio Armani and Emporio Armani boutiques in Hamburg and an Armani Casa unit in Milan, which is the biggest dedicated to the designer’s home line. The company also bought back its license in Spain and Portugal and reopened a boutique in Madrid.
In April, the first Armani Hotel opened in Dubai, in the emirate’s soaring Burj Khalifa tower, the world’s tallest building. The luxury venue is furnished with Armani Casa linens, fabrics, custom furniture and even Armani Privé toiletries in the bathrooms and has 160 rooms, eight restaurants, a spa, Armani/Fiori (flowers), Armani/Dolci (sweets) and an Armani/Galleria, which sells accessories from the designer’s couture line, Armani Privé. There are also 144 private apartments designed by Armani. The project, a venture between Giorgio Armani SpA and Emaar Properties, is the first in a planned collection of hotels, resorts and residences to be unveiled in key cities around the world by the partnership, including Milan, which is up next.
In 2010, Europe accounted for 33 percent of total sales (versus 34 percent in 2009); Italy for 16 percent (18 percent in 2009); the Far East for 17 percent (15 percent in 2009); North America for 22 percent (unvaried), and the rest of the world for 12 percent (11 percent in 2009).
The Giorgio Armani line accounted for 33 percent of sales in both 2010 and 2009. Emporio Armani followed, accounting for 27 percent of revenues (versus 28 percent in 2009). A|X Armani Exchange, which represented 13 percent of revenues, celebrates its 20th anniversary this year.
The company said it closed 2010 with a cash position of 604 million euros, or $797.2 million, up 35 percent compared with 447 million euros, or $621.3 million, in the previous year. The group has 5,300 direct employees and 12 factories.
Earlier this month, John Hooks exited after 11 years at the company, where he last held the post of deputy chairman. The firm said he would not be replaced.