A onetime tax payment weighed on IT Holding's results last year, although the company narrowed its loss to 11.5 million euros, or $14.5 million, compared with a loss of 18.7 million euros, or $23.4 million, in 2005.
MILAN — A onetime tax payment weighed on IT Holding's results last year, although the company narrowed its loss to 11.5 million euros, or $14.5 million, compared with a loss of 18.7 million euros, or $23.4 million, in 2005.
A strong performance by the accessories division helped boost the company's sales in 2006, which grew to 695.1 million euros, or $875.8 million, up 2.8 percent from the previous year. Currency conversions have been made at average exchange rates for the period to which they refer.
In a statement, IT Holding attributed the 41.4 percent hike in operating profits, which reached 36.9 million euros, or $46.5 million, to "an increased efficiency in developing the collections."
Tonino Perna, chairman of the group, said in the statement that 2006 was "an exceptional year," with a focus on the expansion of the group's own brands, Gianfranco Ferré and Malo, and the new license for the production of John Galliano's diffusion line, Galliano, which bowed for spring 2007. "We are already reaping the rewards of our work, and our last two sales campaigns show a 30 percent increase," said Perna.
Over the course of 2006, IT Holding focused on marketing the Ferré label, evolving Malo from a cashmere knitwear brand to a more contemporary, luxury collection with the help of designers Tommaso Aquilano and Roberto Rimondi of the 6267 line, and the start-up of the Galliano collection, "which in 2006 only generated operative costs."
In 2006, with the end of its production of the D&G line, IT Holding had to reorganize its "industrial and commercial activities" to support the development of future ventures. In 2005, Dolce & Gabbana ended its 12-year license with IT Holding for D&G with the fall 2006 collection to take production in-house.
Last year, Malo accounted for 7.7 percent of sales, or 53.3 million euros ($67.1 million). Ferré accounted for 16 percent of sales, or 111 million euros ($139.8 million). The company said retail sales for the brand grew 37.9 percent.
IT Holding's production of young lines for the D&G, Just Cavalli, Versace Jeans Couture, Versus, Extè and C'N'C' brands accounted for the bulk of revenues — 59.6 percent, or 414.1 million euros ($521.7 million).Accessories showed a 37.5 percent growth, reaching sales of 116.3 million euros, or $146.5 million. The company attributed the boost to the performance of the franchised Plus IT stores, which group accessories produced by the company for the Just Cavalli, Extè, C'N'C' Costume National and GF Ferré brands. The Plus IT concept was launched in fall 2005 and now totals 40 units. In particular, sales of GF Ferré accessories grew 27.9 percent to 11 million euros, or $13.8 million.
Geographically, sales in Italy, which is the group's main market accounting for 45 percent of revenues, grew 7.7 percent. Sales in the U.S. dropped 10.5 percent to 59.4 million euros, or $74.8 million, accounting for 8.5 percent of revenues. The company attributed the drop to the end of the D&G license.
While the performance in the Far East and Japan was in line with the previous year, sales in Europe dropped 2.4 percent, while the rest of the world showed a 23.9 percent increase in sales.
The group's debt was reduced to 299.6 million euros, or $377.5 million, compared with 307.4 million euros, or $384.2 million, at the end of 2005.
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