MILAN — Brioni said its operating profits more than doubled in 2006 as it issued a bullish forecast for the current year.
A strategy of cost control coupled with a rise in sales helped propel Brioni’s earnings before interest and taxes by 157 percent to 24.9 million euros, or $31.3 million, last year. The company did not release net profits.
All figures are converted from the euro at average rates.
Consolidated revenue climbed 17.6 percent to 192.8 million euros, or $242.2 million. In an exclusive interview from his offices here in Via Gesù Thursday, Andrea Perrone, co-chief executive officer, said that, based on first-half sales, he expected to post double-digit growth in full-year 2007.
“Fortunately, our company is in a mode of continual growth,” said Perrone, adding that 2006 sales well exceeded company’s expectations.
This is the first time in its history that the privately held company has released a set of audited accounts.
Such a move could seem like a primer for an eventual sale. However, Perrone reiterated that the family’s immediate intentions were to keep control of Brioni despite continual interest from the private equity and investment banking sector.
Perrone said the family released its yearend results to show the market the financial health of the company and subsequently the success of the new management team following last summer’s departure of former chief executive officer Umberto Angeloni.
Just last month Brioni shareholders, through a bank loan, bought back shares from Angeloni and his wife. Brioni’s controlling families acquired the couple’s 17 percent stake for an undisclosed price.
“From the first day we started managing the company we had a very careful control of costs,” said Perrone. “Naturally we did so without neglecting fundamental investments to help move the company forward.”
Looking to the second half of the year and to ’08, Perrone said the company is working on a two-year plan to build its presence not only in historical markets, like the U.S. and Europe, but also in emerging ones, like the Middle East and China.
In the past year and a half the company has opened close to 10 directly operated and franchise stores in cities such as Almaty, Kazakhstan, Mumbai, India and St. Petersburg.
More stores, including a unit in Bal Harbour, Fla., and in Hong Kong, are slated for this year. Perrone said that while location is fundamental, so is the company’s ability to open in markets where it can guarantee a certain level of service.
Perrone said wholesale volume generates 60 percent of revenue and retail sales the remainder. “Our company was built on wholesale,” Perrone said. “And we must remember the historical retail relationships we have, especially in the U.S.”
Although the company plans to expand its retail network, Perrone said he did not see the wholesale/retail ratio changing over the next two years, since wholesale volume continues to mark steady growth as well.
Perrone said the company remains committed to its nascent women’s business. Designed by Cristina Ortiz, Brioni women’s generates about 10 percent of sales. He said the company is looking to implement an exclusive women’s service, on par with its made-to-measure men’s program.
In terms of markets, Perrone said Europe, including emerging markets in the East, represents 40 percent of sales, or 77 million euros ($96.9 million). The U.S. generates about a third, or $64 million euros ($80.6 million). Asia and other markets make up the remainder.
In the U.S., where the company just completed renovations of its Manhattan showroom, Perrone said Brioni would open another flagship somewhere on the East Coast but declined to say where.
On the U.S. wholesale front, Perrone said he still sees growth opportunity as the company selectively introduces new products (Brioni footwear will bow with select partners for spring ’08), establishes shop-in-shops in luxury department stores and modifies its sportswear collection to appeal to a younger clientele.
“These are all operations to bring Brioni to the next level,” Perrone said. “Growth is important, but we want to maintain the excellence and purity of the brand.”
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