MILAN — IT Holding SpA's first-half profit and sales slid on the loss of its lucrative contract for Dolce & Gabbana's diffusion line D&G, but saw growth on a like-for-like basis.
The Italian company's pretax profits fell 24 percent to 9.2 million euros, or $12.2 million at average exchange, for the six months ended June 30. Revenues shed 13.1 percent to 319.2 million euros, or $424.5 million. IT Holding said its first-half revenues on a comparable basis, excluding last year's contribution from D&G, grew 38.4 percent.
IT Holding chairman and chief executive Tonino Perna said the first-half numbers are "perfectly in line" with the company's financial targets and most recent business plan, presented in June.
"From this point, things will only improve," Perna said in an interview. "The spring-summer 2008 collections are selling very well, much better than we had expected."
IT Holding's first-half earnings before interest and taxes dropped to 25.7 million euros, or $34.2 million, from 29.6 million euros, or $36.4 million, but remained stable at just over 8 percent of revenues.
Dolce & Gabbana ended its 12-year partnership with IT Holding in 2005, terminating one of IT Holding's most lucrative licenses and revenue generators. IT Holding produced its last D&G collection for fall-winter 2006. Dolce & Gabbana now produces the line in-house.
Perna reiterated IT Holding has plenty of resources to fuel the company's future growth, namely in-house brands Ferré and Malo and a license portfolio including Just Cavalli, C'N'C Costume National and Versace Jeans Couture. The company does about 79 percent of its business in Europe.
The executive said it is too soon to talk about naming a new creative director for Ferré, which saw the death of its founding designer, Gianfranco Ferré, in June. The house's current design team is busy tweaking the spring-summer 2008 collection, which Ferré had nearly finished before his death. The Ferré show in Milan is slated for Sept. 24.
"We'll see how the show goes. Before that, I don't want to decide anything," Perna said.
IT Holding specified Ferré's gross operating margin improved in the first half of the year to 10.9 percent of sales, compared with 3.5 percent a year earlier. Sales of Ferré products rose 15.6 percent in the six-month period, the company said.In the first half of the year, IT Holding cut its net debt to 319.6 million euros, or $448.1 million, from 336.9 million euros, or $414.4 million, as of June 30, 2006.
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