MILAN — Strong momentum, a streamlined company and growth across its main markets helped Aeffe SpA end 2016 with profits that more than doubled and gains in revenues.
For the 12 months ended Dec. 31, net profits jumped 139 percent to 3.6 million euros, or $4 million, compared with 1.5 million euros, or $4.44 million, in 2015. Dollar figures are converted from the euro at average exchange rates for the periods to which they refer.
Sales rose 4.4 percent to 280.7 million euros, or $308.7 million, compared with 268.8 million euros, or $298.3 million, in 2015. The ready-to-wear division was up 4.2 percent to 215.8 million euros, or $237.4 million. Sales of the footwear and leather goods division edged up 0.2 percent to 95.9 million euros, or $105.5 million, before inter-divisional eliminations.
“Constant attention and [consideration] of initiatives aimed at enhancing our brands’ positioning in terms of special projects and high-potential markets, along with [the] business model’s optimization are the cornerstones of the effectively adopted strategy and the basis for the long-term development,” said Massimo Ferretti, executive chairman of Aeffe. “We are therefore confident about the future, in the light of the trend registered in 2016 and the positive feedback on the ongoing fall-winter 2017-18 collections sales campaign.”
“Our structure is nimble and flexible, after the changes set in motion a few seasons ago,” said managing director Marcello Tassinari in a phone interview, emphasizing how the increase in margins reflected the sales growth.
Earnings before interest, taxes, depreciation and amortization climbed 30 percent to 25.2 million euros, or $27.7 million, lifted by the uptick in sales and a lower operating costs. Tassinari also noted that the company was less weighed down by charges as a result of lower debt.
As of Dec. 31, debt stood at 59.5 million euros, or $65.4 million, compared with 80.5 million euros, or $89.3 million, at the end of December 2015.
Operating profit climbed 71 percent to 10.1 million euros, or $11.1 million.
In 2016, sales in Italy rose 5.3 percent to 126.1 million euros, or $138.7 million, representing 44.9 percent of total revenues.
Sales in Europe, excluding Italy and Russia, climbed 5.4 percent to 60 million euros, or $66 million, representing 21.4 percent of the total. The gain was lifted by Germany, Spain and Eastern Europe.
Russia inched down 0.7 percent to 9 million euros, or $9.9 million, representing 3.2 percent of sales. “There are small signs of a pickup, showing that Russians are back to shopping in Europe,” said Tassinari.
Sales in the U.S. rose 3.1 percent to 23 million euros, or $25.3 million, accounting for 8.2 percent of the total.
In the Rest of the World area, revenues grew 3 percent to 62.6 million euros, or $68.8 million, amounting to 22.3 percent of the total. The performance was driven by an “excellent trend” in Greater China, which posted 7.1 percent growth. The company has been focused on a strategic repositioning in Asia.
The wholesale channel grew 8.3 percent to 201.2 million euros, or $221.3 million, contributing 71.7 percent of total sales.
Retail sales decreased 5.3 percent to 70.3 million euros, or $77.3 million, representing 25.1 percent of the total. “This is mainly attributed to a slowdown in tourism across main European cities, following the terrorist attacks,” observed Tassinari.
Royalties grew 4.5 percent to 9 million euros, or $9.9 million, representing 3.2 percent of the total.
In the year, five new Moschino duty-free, directly operated stores opened in Korea, in addition to a 6,480-square-foot flagship in Milan that combined collections previously sold in two different boutiques in the city.
Five new franchised stores opened in Europe, of which two were Moschino units and three were Pollini venues.
Monobrand stores totaled 255, of which 64 were directly operated.
“We expect another year of growth in both our wholesale and retail channels. January, February and March are showing signs of growth compared with the corresponding months last year,” said Tassinari, adding that the spring 2017 season was up 5 percent.
Following the release of Aeffe’s earnings, in early afternoon trading in Milan, where the company is listed, shares were up 1.37 percent to 1.41 euros, or $1.48 at current exchange.