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Armani 2001 Sales Increase 23%

<CS:BOLD>MILAN -- Giorgio Armani responded to difficult conditions in the luxury market last year with a 23 percent increase in revenues, topping the $1 billion mark, and is forging ahead in the new year with investments in retailing, acquisitions and...

MILAN — Giorgio Armani responded to difficult conditions in the luxury market last year with a 23 percent increase in revenues, topping the $1 billion mark, and is forging ahead in the new year with investments in retailing, acquisitions and licensing.

The company said sales for the year hit $1.13 billion, up from $923 million in 2000, and were ahead in all geographic areas and product categories. Earnings results for the year are expected in April. Dollar figures have been converted from the euro at current exchange.

In May 2002, Armani will acquire Miss Deanna SpA, a knitwear business based in Reggio Emilia, Italy, for an undisclosed sum. The company will produce knitwear across the designer’s collections, starting with spring-summer 2003.

Fossil, the licensee for Emporio Armani watches, has been granted rights to the Emporio Armani Jewelry collection, scheduled to debut for fall-winter 2002. Fossil had 18 percent growth in worldwide retail sales of the watch line last year, according to Robert Triefus, corporate vice president in charge of worldwide communications for the company. “This jewelry collection will be a younger line, price-accessible, and will capture the true essence of the Emporio lifestyle, taking it one step further,” he said.

Triefus indicated the firm will continue to finance its own multitiered growth. “This is a high-cash generative business and we are funding our own growth,” he said. “Following this record performance in 2001, the Armani Group has registered a compounded annual growth rate of 18 percent over the last three fiscal years.”

In 2001, retail revenues grew 9.3 percent to $429 million from $393 million in 2000. Retail sales grew 16 percent in Europe and 15 percent in the Asia-Pacific market. In the U.S., Triefus said retail sales grew 1 percent “despite the current general economic slowdown there,” but cited a 35 percent growth in overall U.S. revenues. The U.S. accounts for 28 percent of sales.

“Following the attacks on Sept. 11, we had a 20 percent decline in retail sales in the U.S. compared to the year before, but 2000 was a special year for us because of our 25th anniversary and the exhibit at the Guggenheim Museum,” said Triefus, who acknowledged that the company is “not back to the levels before Sept. 11, but we really believe in that market. Our investments will continue there in 2002, and we are hopeful for the upcoming fall-winter. This is a cycle and the economy was already suffering a slowdown before the attacks.”

In 2001, consolidated net revenues in the Asia-Pacific area grew 29 percent, accounting for 27 percent of sales. Europe grew 13 percent accounting for 45 percent of business.

In spring 2002, the Giorgio Armani Parfums division will launch a new prestige men’s fragrance, called Armani Mania, in Europe and Asia. The new Giorgio Armani Cosmetics product line, now available at 10 exclusive points of sale worldwide, will also be rolled out to other new markets, including Japan, in 2002.

On the Armani Casa front, the company will supplement its five dedicated home stores with the introduction of home products in specialty and high-end department stores in the U.S. for fall-winter 2002 and will open a store in Instanbul in March, in addition to 20 other Armani Casa locations throughout the world.

“I completely agree on Armani’s diversification strategy,” said Carlo Pambianco, owner of a luxury goods consulting firm here. “Armani has built a strong label and now has chosen to enter other sectors, banking on the strength of his brand. In general, companies that have been focused over the past years are reaping the rewards today.”

Pambianco emphasized that “a diversification strategy works only if it is supported by the right product. That’s why Armani is going after the best partners.”

Paolo Fontanelli, chief financial officer, said that, because of their importance to brand development, allocations for advertising will be maintained at 10 percent of sales in 2002.