MILAN — IT Holding saw lower profits and sales in the first quarter as it shifts to focus on its core apparel and accessories businesses.
Pretax profit for the three months ended March 31 plunged 88.3 percent to 4 million euros, or $5.2 million, from 34.2 million euros, or $42.8 million, the year before. First-quarter profits in 2004 were boosted by an extraordinary gain from the sale of beauty unit ITF, the company explained.
Euros figures have been converted to dollars at average exchange rates for the period to which they refer.
Revenue for the period fell 7.5 percent to 194.7 million euros, or $255.1 million. But the company said sales would have risen 4.7 percent, stripping out the effects of currencies and revenue from businesses that IT Holding has sold. Last year, IT Holding sold its fragrance and eyewear divisions as well as brands Romeo Gigli and Gentryportofino.
Operating profit for the quarter rose 4.8 percent to 13.2 million euros, or $17.3 million.
"We started 2005 by redefining the boundaries of our business," IT Holding chief executive officer Tonino Perna said in a statement, "and we are convinced that we made the choice that the market wanted from us [and that] will confirm leadership in our industry."
The ceo said that despite uncertain market conditions for the luxury goods industry, he forecasts full-year sales growth in apparel and accessories.
In geographic terms, sales rose 7.5 percent in Italy, but fell 5.6 percent in the rest of Europe. Revenue from Asia and Japan climbed 17.4 percent. IT Holding said sales in North and South America and the rest of the world were "substantially stable."
The company said its "young" lines sold particularly well, including Exte, which it has developed in-house, and its licenses for diffusion lines Versus, Versace Jeans Couture, D&G, Just Cavalli and Costume National's C1N1C. Together, sales of these brands rose 5.2 percent to 131.7 million euros, or $172.5 million.
IT Holding said sales of accessories, a product category it is expanding, advanced 38.7 percent to 20.8 million euros, or $27.3 million.
The company specified that sales at its Gianfranco Ferre unit posted first-quarter sales of 31.4 million euros, or $41.1 million, and an EBITDA margin of 12.1 percent. The company could not provide year-earlier figures for a comparison.The company also said it has reimbursed 91.9 million euros, or $120.3 million, worth of Ferre bonds that were due May 10. IT Holding still has 185 million euros, or $242.4 million, worth of bonds outstanding. They are due in 2012.
IT Holding said it has reduced its net financial debt to 365.5 million euros, or $478.8 million, from the 377.3 million euros, or $471.6 million, as of March 31, 2004.
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