MILAN — Aeffe SpA is reaping the rewards of strategies the Italian fashion group set in motion years ago, seeing net profits in 2017 more than triple to 11.5 million euros, compared with 3.6 million euros in 2016.
On Thursday, the company confirmed preliminary sales first reported in February, showing revenues rising 11.4 percent to 312.6 million euros, compared with 280.7 million euros a year earlier.
“The financial year 2017 was characterized by double-digit growth in revenues and a more than proportional increase in profitability, results achieved thanks to the good performance of our brands, especially the proprietary ones and an effective business model,” said executive chairman Massimo Ferretti.
Aeffe, which is listed on the Star segment of the Italian market, controls the Alberta Ferretti brand; Philosophy di Lorenzo Serafini; Moschino, designed by Jeremy Scott, and Pollini, and produces and distributes collections for Cédric Charlier and Jeremy Scott.
“We have always said that we were going to see margins grow more than proportionally to the increase of sales, and the strategies we started to put in place in 2015 are now becoming reality,” managing director and chief financial officer Marcello Tassinari told WWD.
In the 12 months ended Dec. 31, earnings before interest, taxes, depreciation and amortization rose 45 percent to 36.6 million euros, compared with 25.2 million euros in the previous year, driven by the growth of sales and a lower incidence of operating costs.
Operating profit more than doubled, climbing to 22.7 million euros, compared with 10.1 million euros in 2016.
“The group’s medium- to long-term strategic goals are on the development of highly distinctive collections with a focus on a calibrated strengthening of our presence in high-potential markets, especially in the Greater China and Asia-Pacific areas,” continued Ferretti, who is the brother of designer Alberta Ferretti. “Considering the group’s vitality and the positive feedback on the ongoing fall/winter 2018-2019 collections sales campaign, we feel confident about the further development and consolidation of our brands in 2018.”
Tassinari also sounded an upbeat note on 2018, leveraging a company that aims “to be reactive to situations.”
Like many competitors, Aeffe is tuning in to the needs of Millennials and focusing on developing its omnichannel platform as well as high-potential markets, in particular China and South East Asia. Tassinari said exports represent around 70 percent of total revenues.
Sales of directly operated stores last year represented 26.7 percent of revenues, increasing 18.4 percent compared with 2016. The wholesale channel grew 8.9 percent, accounting for 70.1 percent of the total.
Revenues of the ready-to-wear division rose 11.1 percent to 239.8 million euros.
Sales of the footwear and leather goods division increased 12.8 percent to 108.2 million euros.
Aeffe is looking to strengthen its product diversification through a multiyear plan aimed at extending the accessories and leather goods collections, leveraging Pollini’s production capabilities. “We started with Moschino, growing its accessories category to account for 40 percent of the brand’s sales, up from 15 percent,” said Tassinari. “We are now developing this category for Alberta Ferretti, with capsules for the Mia Mule, for example, and for Philosophy di Lorenzo Serafini, which just presented a capsule with Superga.”
There are also a number of licensing initiatives, especially for Moschino, as the collaboration with Safilo on the eyewear collection started to be effective in January.
Last year capital expenditure totaled 3.8 million euros, mostly related to the maintenance and refurbishment of stores.
As of Dec. 31, net debt stood at 50.6 million euros, compared with 59.5 million euros at the end of December 2016.