Model on the catwalkMOSCHINO Spring Summer 2018 Menswear and Women's Resort Collection, Runway, Los Angeles, USA - 08 Jun 2017

MILANAeffe SpA closed the first six months of the year on an upbeat note.

In the period ended June 30, net profit more than tripled, jumping to 4.6 million euros compared with 1.5 million euros in the first half last year.

Sales rose 8.8 percent to 150 million euros, compared with 137.8 million euros in the same period last year.

Revenues of the ready to wear division were up 8.8 percent to 116.3 million euros, while sales of the footwear and leather goods division increased by 12.5 percent to 50.4 million euros.

Aeffe controls the Moschino, Alberta Ferretti, Philosophy di Lorenzo Serafini and Pollini brands and produces and distributes collections for Cédric Charlier and Jeremy Scott.

Massimo Ferretti, executive chairman, said he was “very satisfied” with these results “achieved thanks to the positive performance of all proprietary brands, along with the progressive recovery of the retail channel, especially in Europe. For the current year, we aim to confirm the growth trend of sales and more than proportional progression of profitability, as well as to continue to develop initiatives to promote the excellence and quality of our collections and to enhance the positioning of our brands at international level.”

Regarding the profit increase, managing director and chief financial officer Marcello Tassinari expressed no surprise, saying it is a consequence of a strategy that began two or three years ago with “a very important reduction in costs,” and that “it is more than proportional to the increase in revenues.” The sale of the company’s pre-collections also led him to be positive about the rest of the year, though cautious.

In the first six months, sales in Italy rose 19 percent to 72.1 million, accounting for 48 percent of total revenues.

Sales in Europe climbed 5.9 percent to 32 million euros, representing 21.3 percent of total.

The Russian market, representing 3 percent of sales, was down 5.9 percent. “Locally, Russia continues to show weakness, but Russian tourists are traveling again,” said Tassinari, adding however that he saw “timid signs of improvement” in the region.

A slowdown in department stores dented sales in the U.S., which posted a decrease of 12.5 percent to 9.7 million euros, contributing to 6.5 percent of total sales. “This is in line with the decrease there in the first quarter. Our business in that area is mainly wholesale and the luxury sector is hurt by the crisis of U.S. department stores,” observed Tassinari. To help curb this, the Italian fashion group plans to work on special projects and capsules to reach the final customer also through the online channel. Asked about the devaluation of the U.S. dollar, Tassinari admitted “we did not expect it as analysts were forecasting [parity with the euro]. We are analyzing the situation but we’ll see what happens. Our previous hedging operations left us strong.”

In the six months, the Rest of the World area was up 1.9 percent to 31.7 million euros, representing 21.1 percent of sales.

Earnings before interest, taxes, depreciation and amortization rose 26.7 percent to 15.5 million euros, with an incidence of 10.3 percent, mainly lifted by the growth of both distribution divisions.

Operating profit climbed 56 percent to 9.6 million euros.

Wholesale sales grew 6.1 percent to 105.2 million, representing the lion’s share of the business and contributing to 70.2 percent of the total.

The retail channel rose 17.9 percent to 40 million euros. Tassinari said the company will open three new directly operated store by the end of the year — one Alberta Ferretti banner in Shanghai and two Pollini units in Rome, of which one on August 3 on Via del Babuino.

There are also plans to open around 10 franchised stores in Asia, mainly in China, by the end of the year.

In the first half, royalties inched up 0.6 percent to 4.7 million euros.

Capital expenditure totaled 1.9 million euros, mostly related to the maintenance and refurbishment of stores, compared with 2.4 million euros in the same period, which included the opening of a new Moschino store on Milan’s Via Senato.

As of June 30, net debt stood at 67.1 million euros, compared with 76.3 million euros at the end of June last year.

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