MILAN — The slowdown in consumer spending may be blighting some Italian fashion companies, but others are giving it the V-sign.
This story first appeared in the May 19, 2008 issue of WWD. Subscribe Today.
On Friday, both Valentino Fashion Group and Versace reported first-quarter growth in consolidated revenues, buoyed mainly by advances in Asia.
VFG, which was acquired by private equity fund Permira in July, said sales for the three months ended March 31 gained 2.4 percent to 652.8 million euros, or $977.7 million, prompting group chairman and chief executive officer Stefano Sassi to forecast an upward trend in revenues for the remainder of this year — albeit at constant exchange.
Earnings before interest and taxes for the period stood at 97.7 million euros, or $146.3 million, which VFG said were not comparable with the same period a year earlier, due to “the amortization of allocated surpluses” derived from the Permira acquisition and “extraordinary effects” tied to management changes at Hugo Boss.
Sassi said he expected full-year operating profits and margins to improve on 2007.
“We maintain that we can grow operating profits before extraordinary items in 2008 [and make] an improvement proportional to revenues growth,” Sassi said.
The Valentino brand was the group’s standout performer, with sales up 12 percent to 70.6 million euros, or $105.7 million. The brand did particularly well in the U.S., where, stripping out the effects of currency fluctuations, sales gained 38 percent to 15 million euros, or $22.5 million.
Sassi said last week that he hoped to double sales at Valentino over the next five years, setting annual revenue growth targets of 15 percent.
Sales at Hugo Boss gained 2 percent to 509.5 million euros, or $763.11 million, while revenues at Marlboro Classics and other brands dipped 2 percent to 74.1 million euros, or $111 million.
Despite the effects of a strong euro, VFG did well in Asia and the Americas.
Sales in Asia and other countries were up 18 percent to 76.5 million euros, or $114.6 million — although at constant exchange, revenues grew 27 percent. Sales in the Americas were up 4 percent at current exchange and 16 percent at constant exchange to 97.3 million euros, or $145.7 million.
Revenues in Europe dipped 1 percent to 461.8 million euros, or $691.7 million, dented mainly by the slowdown in consumer spending in Germany.
Meanwhile, Versace, which in March opened the first of nine stores planned in Asia this year, reported an 11.8 percent hike in turnover.
Versace did not release figures for the period, as it normally only does so biannually and annually.
Versace ceo Giancarlo Di Risio told WWD that in March the company planned to invest about 45 million euros, or $69.7 million, to open 11 stores, mainly in Asia, in a bid to have the region replace the U.S. as the fashion group’s second largest in terms of sales.
In a statement Friday, he repeated: “These objectives in the Far East specifically have the strategic objective to tier the Asian market in second place in terms of final turnover after Europe.”