MILAN — Investments affected profitability at Aeffe SpA in the first nine months of the year, on the back of an increase in revenues.

The Italian fashion group, which controls the Moschino, Alberta Ferretti, Philosophy di Lorenzo Serafini and Pollini brands and produces and distributes collections for Cédric Charlier and Jeremy Scott, posted a 37.9 percent decline in net profits to 1.5 million euros, or $1.6 million, compared with 2.5 million euros, or $3.3 million, in the same period last year.

Driven by growth in Greater China and the U.S. in particular, in the nine months ended Sept. 30, revenues rose 7 percent to 206.5 million euros, or $229.2 million, compared with 192.9 million euros, or $260.4 million, last year. At constant exchange rates, sales rose 5.1 percent. Revenues of the ready-to-wear division were up 7.7 percent to 158.6 million euros, or $176 million, while the footwear and leather goods division rose 14.1 percent to 72.7 million euros, or $80.7 million.

Executive chairman Massimo Ferretti said the company is focused on “the implementation of a significant strategic investment plan for the development of our brands, which will allow us to catch new growth opportunities in the medium-long term.” He said he was “therefore optimistic, encouraged by the results of the first nine months of the year and by the orders intake for next spring/summer collections, up by 14.3 percent.”

In an interview with WWD, managing director and chief financial officer Marcello Tassinari echoed Ferretti’s comments, saying “despite the uncertainties of the market, Aeffe has chosen to push on the accelerator” and that he was “comforted that the choices and investments on the brands are showing the right results.”

Aeffe spent more than 2 million euros, or $2.2 million, on brand advertising and communication “to further increase visibility,” and has been investing in “internalizing research” on Moschino’s men’s wear production, taken in-house with the fall 2015 season, and in the promotion of the brand’s men’s show, which was presented in Florence in June. In addition, Aeffe in the period opened three new Moschino stores, in New York, Los Angeles and Milan.

In the nine months, earnings before interest, taxes, depreciation and amortization decreased 20.7 percent to 17.9 million euros, or $19.8 million. Operating profit dropped 34.4 percent to 8.3 million euros, or $9.2 million, reflecting a reduction in EBITDA. Tassinari said he expected EBITDA to grow in 2016.

Sales in Italy gained 5.7 percent to 92.6 million euros, or $102.7 million, representing 44.8 percent of the total. Revenues in Europe grew 3.5 percent to 44.4 million euros, or $49.3 million, accounting for 21.5 percent of total sales.

The Russian market, hurt by its difficult economy, decreased 48.4 percent to 7 million euros, or $7.7 million, representing 3.4 percent of revenues. Tassinari said Aeffe has “decided to invest on the Russian market, in light of its relevance in luxury and for the future,” by supporting its clients with discounts.

Boosted by a weak euro, sales in the U.S. grew 43.3 percent to 16.3 million euros, or $18 million, accounting for 7.9 percent of the total. At constant exchange, sales rose 20.9 percent.

Revenues in Japan climbed 12.8 percent to 5.6 million euros, or $6.2 million, contributing 2.7 percent of sales.

In the Rest of the World area, sales totaled 40.5 million euros, or $45 million, up 25 percent and representing 19.6 percent of the total, boosted by an “excellent” performance in Greater China, which saw revenues jump 65 percent. Tassinari conceded Aeffe is not “as present” as some of its competitors in the area, but that there is “great potential” for its brands. “There is a strong demand for Moschino, and the signature line to Boutique and Love Moschino can be further developed,” he said. There are 46 franchised monobrand boutiques in Greater China. Tassinari said he expected to grow in 2016 and 2017 in the region as well.

As of Sept. 30, net debt stood at 99.5 million euros, or $110.4 million, compared with 90.1 million euros, or $121.6 million, at the end of September 2014, reflecting the increased investments.

As reported, Aeffe and Emanuel Ungaro did not renew the license inked three years ago.

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