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MILAN — A week before his celebratory trip to Beijing, Giorgio Armani said China posted a 45 percent gain in sales last year, which helped increase profitability and revenues of his namesake fashion company in 2011.
This story first appeared in the May 24, 2012 issue of WWD. Subscribe Today.
In the year ended Dec. 31, Giorgio Armani SpA’s operating profit rose 23.2 percent to 281.8 million euros, or $391.7 million, compared with 228.6 million euros, or $301.7 million, the previous year. Sales grew 13.6 percent to 1.8 billion euros, or $2.5 billion, from 1.59 billion euros, or $2.11 billion, in 2010. The company, which is privately held by Armani, did not disclose its net profit.
Dollar figures are converted at average exchange rates for the periods to which they refer.
The designer, who is also chairman of the Milan-based company, said, “The excellent results achieved in 2011, both in terms of turnover and profit margins, confirm yet again the soundness of the group’s strategies, particularly given the current period of uncertainty.”
Armani also touted a “clear, balanced industrial strategy aimed at creating positive, long-lasting value,” as much as the “significant support” of the group’s partners.
Last year, the group’s revenues, including licensed products, reached 6.73 billion euros, or $9.35 billion, compared with 6.02 billion euros, or $7.95 billion, the year before.
This year has also kicked off on a positive note, as the group saw a double-digit increase in revenues in the first quarter, both at retail and wholesale. The company plans to pursue expansion in both emerging and mature markets.
“On the basis of these results we look with cautious optimism to 2012 and beyond, and reconfirm our long-term strategic development plans,” said Armani.
In 2011, all brands grew across all geographical markets, and the company highlighted a selective distribution strategy and a streamlined management. 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.
The Giorgio Armani line accounted for 32 percent of total sales, including licensed products at wholesale value (versus 33 percent in 2010). Emporio Armani followed, accounting for 27 percent of revenues, as it did the previous year. A|X Armani Exchange accounted for 14 percent of sales, versus 13 percent in 2010.
By product category, clothing remained the group’s core business, accounting for 57 percent of turnover, compared with 55 percent the previous year. Perfumes and cosmetics are the second largest, accounting for 26 percent of sales, versus 27 percent in 2010. Eyewear accounted for 6 percent of revenues, compared with 7 percent in 2010. In November, the group said it was not renewing its eyewear license with Safilo and returning to Luxottica for a 10-year agreement for the production and distribution of eyewear for the Giorgio Armani, Emporio Armani and A|X brands, beginning in January.
Geographically, Europe excluding Italy was the biggest market for the group, accounting for 31 percent of sales, versus 33 percent the previous year, followed by North America, representing 23 percent of revenues, up from 22 percent in 2010. The Far East accounted for 18 percent of sales, compared with 17 percent the previous year.
Sales in directly operated stores grew 10 percent, lifted by gains in established markets, such as Europe, despite the unfavorable economic context, and in the U.S. Asia also showed strong growth, boosted by a 45 percent jump in sales in China. The designer, whose first signature boutique opened in Beijing in 1998, has an established business in the region. Today, there are 289 group stores in 50 cities in Greater China, including 16 Giorgio Armani, 62 Emporio Armani, 60 Armani Collezioni, 60 AJ Armani Jeans, one AJ Armani Jeans Accessories, 15 Armani Junior, 39 A|X Armani Exchange and nine Armani Casa.
In November, Armani revamped the Hong Kong multibrand concept store in Chater House, which originally opened in 2002. Armani has had a presence in Hong Kong since 1992.
Globally, there are 751 group stores in 46 countries, of which 89 are Giorgio Armani boutiques.
The company said it closed 2011 with a cash position of 642.8 million euros, or $893.5 million, compared with 603.6 million euros, or $796.7 million, in 2010.
“Our net cash has reached a new high, despite the fact that we have kept up our investment to expand our distribution network,” said the designer.
Capital expenditure totaled 89.3 million euros, or $124.1 million, in line with the previous year, mainly aimed at expanding the group’s distribution network. Armani last year opened 100 stores, reaching a total of 2,125 points of sale throughout the world, including the above-mentioned 751 boutiques. Among the most significant openings in 2011 were the designer’s revamped Madison Avenue flagship in New York; a Giorgio Armani boutique in Berlin; an Emporio Armani unit on Paris’ Rue du Faubourg Saint-Honoré, and one in Barcelona, and Emporio and Giorgio Armani stores in Hamburg.
The Armani Hotel Milano opened in November under the Armani Hotels & Resorts banner, a venture between Giorgio Armani SpA and Dubai-based developer Emaar Properties PJSC that was formed in 2005. The Milan location follows the unveiling in April 2010 of the designer’s first hotel in Dubai’s Burj Khalifa tower.
The group has more than 5,700 direct employees and 12 factories.