MILAN — Giorgio Armani on Tuesday released financial results showing a 14 percent jump in 2003 net profit and improving market conditions in the first quarter of this year. And by the way, don’t expect him to retire anytime soon.
Armani said net profit for the year ended Dec. 31, 2003 rose 14 percent to $151.6 million, or 134 million euros, while sales dropped 3.5 percent to $1.43 billion, or 1.26 billion euros. Dollar figures have been converted at the current exchange rate.
These numbers are preliminary and more detailed results, including a breakdown of sales growth or decline in various geographic markets, will be released in early May.
Armani, speaking at a press conference along with managing director Gianni Gerbotto and chief financial officer Paolo Fontanelli, reiterated his intentions to remain at his empire’s helm. He said he doesn’t rule out the possibility of working with a partner in the future, but for now, he’s going it alone. He said he doesn’t feel pressured to come up with a succession plan just yet.
“Taking a step back is not something I want to do in life,” he said. “If anything, I want to step forward.”
Armani similarly dismissed the idea of listing his company on the stock exchange. “Why do I need to do an IPO? I don’t need the money,” he said, adding he hasn’t been impressed with most listed companies’ results or expansion drives, save LVMH Moët Hennessy Louis Vuitton because the Vuitton brand has “substance to it.”
As for the first quarter of this year, Armani said retail sales through the group’s network of directly owned stores rose 9 percent. More specifically, sales in the U.S. were up 15 percent while those in Europe and Japan grew 3 percent. Gerbotto and Fontanelli said tourist flows in Europe are still weak, but improving, and sales momentum in less tourist-dependent countries like Germany is helping offset the phenomenon.
Armani also said first-quarter wholesale sales for the autumn-winter 2004 collections were up 10 percent. Accessories sales for the period rose 34 percent. Executives declined to give a full-year forecast for 2004, but Fontanelli said it would be a year of “growth.”On another positive note, Fontanelli said relief could be on the way regarding that pesky euro-dollar exchange rate that is cutting into European firms’ balance sheets.
“We are counting on a strengthening of the dollar in the second part of the year,” Fontanelli said. “Everyone is expecting that to a certain extent.”
Armani himself has undertaken a packed schedule. Tuesday, he and his team flew to China to cut the ribbon on a Shanghai flagship. Located on Shanghai’s Bund, the 11,840-square-foot space consists of a Giorgio Armani boutique and an Emporio Armani store. The flagship also features counters dedicated to the designer’s floral and confectionary creations, the respective Armani Fiori and Armani Dolci product lines.
Armani is staging a fashion show in Shanghai as part of the festivities and a few days later will hold another one in Hong Kong, where he opened a flagship in 2002. The Far East, excluding Japan, made up 5 percent of Armani’s wholesale revenues in 2003, but the company is intent on expanding that slice of the pie. Armani has eight stores in China but wants to boost that count to about 30 over the next five years. Armani said sales in China in the first quarter of this year were up 17 percent.
Store openings and refurbishments are a large part of Armani’s strategy. In 2003, the company made $43 million, or 38 million euros, worth of investments, most of which went toward stores. Investments during the last five years have totaled nearly $792.2 million, or 700 million euros.
Armani opened 30 freestanding stores and renovated 11 stores in 2003. Fontanelli said Armani would probably open about 30 more boutiques in 2004.
Elsewhere, Armani is preparing to get into the hotel business. Earlier this year, the company inked a deal with Dubai-based Emaar Properties to open 14 luxury hotels and resorts during the next seven years. The first of these resorts, a 430,556-square-foot space in Dubai, is slated to open in late 2006 or early 2007, Gerbotto said. Armani also confirmed that the upper levels of the Milan palazzo housing his flagship would be converted into a hotel, too.
The Armani-Emaar partnership marks the most recent development in an increasingly crowded designer hotel landscape. Versace has said it wants to build more resorts like its six-star one on Australia’s Gold Coast. Later this year, in Milan, Bulgari will open the first in a chain of luxury hotels it is rolling out with Marriott International.Armani will obviously furnish every aspect of every hotel so the deal is sure to boost sales for the designer’s burgeoning home line, Armani Casa. Gerbotto said Armani Casa sales make up only about 1 percent of Armani’s wholesale revenue but they are growing quickly, rising 18 percent in 2003.
Coinciding with the start of Milan’s design fair, Il Salone del Mobile, Armani unveiled Tuesday his latest Armani Casa collection. The line features Asian and Art Deco influences and a color palette spanning creamy neutrals to rich chocolates. Overall, the prints were subtle, with the notable exception of leopard-spotted lamps. As he toured the collection with journalists, Armani joked that some of his wilder designer counterparts corrupted his minimalist aesthetic for these accent pieces.
“This is Cavalli-style pollution,” he quipped as he gestured to a lamp.
Armani said he’s very happy to see more and more multibrand retailers carrying the Armani Casa line, noting a growing market for designer furnishings.
“The customer is no longer buying just an isolated piece but is buying up a whole atmosphere,” he said.
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