MILAN — Yoox Group on Wednesday reported solid growth in the three months ended March 31, lifted by gains in all its main markets and at both business channels, although its bottom line was dented by currency headwinds.
This story first appeared in the May 8, 2014 issue of WWD. Subscribe Today.
The Italian e-tailer confirmed its positive 2014 outlook as it expects further global growth, strengthens its mobile and cross-channel offerings and leverages its multi- and mono-brand stores, including Dsquared2, a partnership agreement renewed this week for another five years.
In the first quarter, net profit totaled 900,000 euros, or $1.2 million, down 13.4 percent compared with 1.1 million euros, or $1.4 million, in the same period last year. Profits were impacted by higher depreciation and amortization related to technology investments and higher financial charges associated with unrealized exchange-rate losses and interest expenses.
Revenues rose 14.6 percent to 126.5 million euros, or $173.3 million.
“We are satisfied with these results, although currency volatility is not helping,” founder and chief executive officer Federico Marchetti told WWD. “Yoox continues to grow and is part of a sector that still has much growth potential.”
Marchetti remarked on the gains in Italy, which was up 19.7 percent, with sales of 20 million euros, or $27.4 million, boosted by mobile sales. “This to me is very interesting, it’s an amazing result [given the economy in the country].”
The rest of Europe grew 15.2 percent with “exceptional” results in the U.K. Other countries grew 24 percent, led by China, where Yoox is accelerating due to an expansion in February following a new logistic setup.
Japan was up 10.3 percent, but would have grown 27.5 percent at constant exchange, and the U.S. showed an 8.5 percent increase, but would have risen 12.5 percent at constant exchange.
In the period, global operating profit climbed 30 percent to 2.4 million euros, or $3.3 million.
Earnings before interest, taxes, depreciation and amortization rose 34 percent to 8.1 million euros, or $11.1 million.
Dollar figures were converted from the euro at average exchange rates for the periods to which they refer.
Marchetti underscored the relevance of the renewal of the Dsquared2 agreement. “This is very important — it’s one of our top stores in terms of revenues and the brand has one of the highest online penetration on its total sales. It’s a benchmark for us,” said the entrepreneur of the collaboration, which started in 2009 selling on Yoox’s site Thecorner.com and moved onto the brand’s own store.
Dean and Dan Caten, founders and creative directors of Dsquared2, were equally enthusiastic about the agreement. Dan Caten said online sales last year accounted for 3 percent of the company’s overall revenues, which totaled 195 million euros, or $257.4 million, and that, as the brand extends to other product categories, the online channel allows it to offer all the label’s merchandise, compared with its “smaller” brick-and-mortar stores.
The performance of the brand’s e-store is so relevant that it drives retail strategies. “We have decided to open in Los Angeles, New York and Miami based on the sales of our online store,” said Dean Caten. “Americans are our biggest online customers.”
Digital commerce grew on the twin brothers, who were initially skeptical of its potential. “It’s been a learning experience. At first, we were not so keen, so we decided to link up with experts. We didn’t know who bought online, but then we started seeing how successful it was; we didn’t expect it and it’s opened our eyes on our customer base,” said Dan Caten.
The brothers have since eagerly embraced social media, “investing money on social network videos and support to create excitement online. A lot of Web sites don’t look exciting, but we want [our online store] to be informative, clear, as simple as possible to navigate, functional and look good.”
Asked to explain why the Dsquared2 site is so successful online, Marchetti said, “Their product and target customer are in line [fitting the Internet] but this would not be enough. They have a clear managerial online strategy that is well communicated within the company, a well-executed management of the store and the designers are actively engaged. They have fun with it and the store reflects their brand.”
He said there is an ambitious five-year plan, with hopes of a triple-digit growth of this store.
Responding to a question about his views on the activity of competitors such as Alibaba Group, which is filing for a U.S. initial public offering, Marchetti said he was “studying the situation. I think this can be good for Yoox. When we launched our IPO in 2009, we were the only other brand with Asos. Scarcity can be positive, but also a disadvantage, more comparables can help us in the management of expectations of the market.”
Marchetti confirmed the group’s outlook for 2014, expecting further growth of sales and profitability this year, boosted by all markets and both business channels.