MILAN — Marzotto is getting acquainted with Valentino’s trademark red in more ways than one.
Losses from the recently acquired fashion house, coupled with a exceptionally high tax rate, caused Marzotto to post a net loss for the first half of 2003.
Meanwhile, the company warned that net profit for the full year should drop sharply, suffering from both a higher tax rate and the absence of capital gains that boosted 2002 results.
Marzotto reported a net loss of $10.2 million for the six months ended June 30, compared with a profit of $2.3 million in the first six months of 2002. Dollar figures have been converted from the euro at current exchange as Marzotto reported a loss of 9 million euros versus a profit of 2 million euros in last year’s first half.
The company did not break down second-quarter figures, but subtracting results from the first three months of the year shows that the second-quarter loss widened to $27.8 million, or 24.5 million euros, from a loss of $23.3 million the year before.
Sales for the first half rose 4.3 percent to $984.8 million, or 868 million euros, from $944 million, or 832 million euros, the year before. Marzotto said sales benefited from the consolidation of Valentino, purchased last spring. Sales in the clothing sector rose 5 percent while those in the textile sector grew by 4 percent.
Marzotto has said Valentino is on track to break even in 2004. A spokesman noted Thursday that Valentino’s earnings before interest and taxes during the first half improved by more than $11.4 million, or 10 million euros
Consolidated operating profit in the six months climbed 16 percent to $51.1 million, or 45 million euros, from $44.3 million, or 39 million euros, the year before.
In a statement, the company attributed the improvement to “the clothing sector’s good results and the encouraging recovery of the textile sector.”
A spokesman added later that Marzotto’s textile operations, a struggling part of the business that is undergoing restructuring efforts, managed an improvement of about $11.4 million, or 10 million euros, in EBIT during the first half.
Also on Thursday, De Rigo reported that a strong euro contributed to a slight contraction in its half-year sales.
The Italian eyewear manufacturer said sales dipped 0.3 percent to $307.1 million, or 273.4 million euros, for the period ending June 30.
Dollar figures have been converted from the euro at current exchange. At constant currency rates, sales would have risen 4.6 percent to $322.1 million.
Wholesale revenues dropped 5.1 percent to $89.7 million, or 79.9 million euros, while retail sales slipped 1.5 percent to $205.1 million, or 182.6 million euros.
Meanwhile, sales at its recently terminated joint venture with Prada, EID or International Eyewear Distributor, jumped 32 percent to $22.3 million from $16.9 million in the same period last year. As reported, De Rigo sold its 51 percent stake in EID to Prada for $9.4 million, or 8.4 million euros, earlier this month. Prada subsequently sold 100 percent of EID to Luxottica for $30.4 million, or 26.5 million euros.