MILAN — Meet Giorgio Armani, fast-fashion retailer.
This story first appeared in the May 16, 2014 issue of WWD. Subscribe Today.
On Thursday, Armani unveiled ambitious plans to turn his A|X Armani Exchange brand into “the first global Italian fast-fashion brand targeting a young customer whose DNA is strongly Armani.” The designer unveiled the strategy as he revealed he has acquired the remaining 50 percent of A|X that he did not already own and while reporting that the Giorgio Armani Group had an 18.2 percent increase in operating profits last year.
While Armani did not provide any details about his new strategy, his statement implies he is eager to take on the likes of H&M, Zara, Uniqlo, Mango and even Topshop. The global fast-fashion chains have been aggressively expanding worldwide over the last five years and believe there is significant growth ahead.
Armani raised his stake in the A|X Armani Exchange venture with Como Holdings Inc. to 50 percent at the end of 2008. He did not reveal what he paid for the remaining half of the business.
The brand has a strong foothold in the U.S. and has 270 stores worldwide and more than 3,000 employees. Leveraging his group’s liquidity of 700 million euros, or $924 million at current exchange, the designer said he plans to invest in all his brands, “starting with A|X,” injecting funds this year and in 2015 “for a cohesive integration within the portfolio of brands that make up the group.”
In 2013, the Italian fashion company’s operating profit totaled 401 million euros, or $529.3 million, compared with 339 million euros, or $434 million, in 2012. Margins totaled 18.4 percent.
Revenues climbed 4.5 percent to 2.18 billion euros, or $2.87 billion, compared with 2.09 billion euros, or $2.68 billion, in the previous year. At constant exchange, sales would have risen 8.3 percent.
The company attributed the growth to all of its brands and to gains in its distribution channels, despite the slowdown in luxury goods in some emerging markets. The group’s retail channel showed a 6.9 percent gain at current exchange. At constant exchange, it would have risen 14.6 percent. The wholesale channel grew 4.2 percent at constant exchange (a variation at current exchange was not provided). Geographically, all markets contributed to the growth, in particular Europe, and especially France and the U.K.
Last year, group revenues, including licensed products at retail value, reached 7.75 billion euros, or $10.23 billion, compared with 7.4 billion euros, or $9.47 billion, in 2012.
Dollar amounts were converted at average exchange rates for the periods to which they refer. Armani does not reveal net profits until later in the year, when the company publishes its annual report.
“The success of a brand lies in the ability to blend creativity and sales and these results confirm this, in light of the feedback on our products from the markets,” said the designer, who is also the chairman of the fashion house. “In addition, the strong profitability and liquidity that we have at our disposal allow us to accelerate our investments for future development.”
Last year, investments totaled around 100 million euros, or $132 million, mainly aimed at its distribution channel, which has reached 2,473 stores globally, and the improvement and efficiency of its supply chain.
The group’s brands include Giorgio Armani Privé, Giorgio Armani, Emporio Armani, Armani Collezioni, AJ Armani Jeans, Armani Junior and Armani Casa, in addition to A|X Armani Exchange.
The venture with Como Holdings Inc., called Presidio Holdings Ltd., with Christina Ong and her husband, Ong Beng Seng, Armani’s longtime business partners and the licensees of the A|X Armani Exchange brand, was signed in 2005, and has helped boost worldwide revenues of the A|X brand. When he increased his stake in the brand to 50 percent, the designer said: “Fast fashion is a young and dynamic segment of the market which I find particularly stimulating when designing my collections.” He continued highlighting that he had “always believed that A|X Armani Exchange has the potential to become one of the world’s strongest youth fashion brands.”
A|X Armani Exchange was launched in 1991, the same year it opened its first retail store in Manhattan’s SoHo. Of note, A|X Armani Exchange was a pioneer in online communication and retailing, launching its armaniexchange.com site in 1995 and adding online sales in 1997. The A|X Armani Exchange business was just one component of the Ongs’ partnership with Armani. The couple opened the first Armani boutique in 1988, and went on to operate a number of Armani and Emporio stores. In the Nineties, the Ongs helped rescue Simint, Armani Jeans and A|X Armani Exchange’s manufacturer, from bankruptcy.