MILAN — As it reported a 41 percent jump in net profits in the first quarter, Aeffe SpA revealed information about Alberta Ferretti’s contract and her salary.
As one of the group’s main shareholders, Aeffe was required to disclose details about the designer’s contract upon its renewal, explained managing director and chief financial officer Marcello Tassinari. Aeffe’s board has renewed the agreement with Ferretti, who is also an executive director and the founder and designer of her namesake line, which is owned, produced and distributed by the Italian group.
Ferretti’s creative consultancy contract was renewed for an additional three-year period until May 15, 2020 and she will be paid 1 million euros, or $1.08 million at current exchange, a year. This is a gross sum, said Tassinari and it is “fully in line with market standard fees,” said the company. It will guarantee a “continuity in the style, in the presentation and in image of the collection” as well as Ferretti’s “presence and commitment” as the creative director of the brand. Ferretti’s “stylistic collaboration…is indispensable and strategic for the company.”
Aeffe, which is listed on the Star segment of the Italian market, also controls the Moschino brand, designed by Jeremy Scott; the Philosophy di Lorenzo Serafini and Pollini labels, and produces and distributes collections for Cédric Charlier and Jeremy Scott.
In the three months ended March 31, Aeffe’s net profit climbed to 8.1 million euros, or $8.6 million, compared with 5.8 million euros, or $6.4 million, in the same period last year. Tassinari said the bottom line was lifted by the group’s increase in sales and a trimming of fixed costs, as well as a renegotiation of financial charges because of a shrinking debt.
Revenues increased 4.4 percent to 79.6 million euros, or $84.3 million, compared with 76.2 million euros, or $84 million, in the first quarter last year.
Sales of the ready-to-wear division were up 3.5 percent to 61.4 million euros, or $65 million, while revenues of the footwear and leather goods division increased 8 percent to 25.4 million euros, or $27 million.
“We are satisfied with the continuous group’s progression, thanks to the positive performance of all proprietary brands, along with the recovery of the retail channel, especially in Europe,” said executive chairman Massimo Ferretti, who is also the brother of Alberta Ferretti. “In addition, the fall collection sales campaign ended with an increase of 13.1 percent, providing visibility on the good prospects for the current year.”
Earnings before interest, taxes, depreciation and amortization gained 11 percent to 15.4 million euros, or $16.3 million. Operating profit rose 15 percent to 12.5 million euros, or $13.2 million.
Sales in Italy were up 15.9 percent to 38.3 million euros, or $40.6 million, representing 48.2 percent of the total. Tassinari said the Pollini brand, “very much rooted in the country,” has been growing. Local spending also benefited from tourism.
Revenues in Europe, excluding Italy and Russia, edged up 0.6 percent to 18 million euros, or $19 million, accounting for 22.6 percent of the total. “There is a slight pickup, despite the geopolitical situation in the continent,” said Tassinari.
Russia grew 9.1 percent to 2.5 million euros, or $2.6 million, representing 3.2 percent of the total, showing a recovery of the region. “The market is still small, but it is not negligible,” said Tassinari. “Also, Russians are back as tourists in Europe and they spend outside their own country, too.”
Sales in the U.S. decreased 12.2 percent to 6 million euros, or $6.3 million, contributing to 7.4 percent of the total. Tassinari attributed the drop to “the slowdown in sales affecting department stores, which feel the competition of the online channel. Our business in the U.S. is mainly wholesale, so we feel the bottleneck there.” To counteract the situation, Aeffe is “increasingly focusing on structuring the collections with special capsules, promoting them with strong web communication to increase the customer’s desire, so she will go to the department store with the goal to buy.”
In the Rest of the World area, revenues decreased 8.6 percent to 14.8 million euros, or $15.6 million, amounting to 18.6 percent of the total, especially due to a shift in the timing of deliveries in the period. Tassinari was confident the region would grow in the rest of the year.
The wholesale channel increased 3.3 percent to 57.5 million euros, or $61 million, contributing to 72.3 percent of the total.
Revenues at directly operated stores increased 9.2 percent to 20 million euros, or $21.2 million, and contributed to 25.1 percent of the total.
Aeffe had 64 directly operated stores and 175 franchised units at the end of March. Compared with the full-year 2016, the group closed 13 franchised stores in Asia as part of a strategic repositioning of the venues and plans to open 10 new franchised stores by the end of 2017 to strengthen its presence in that market.
In the first quarter, royalties decreased 6.8 percent to 2.1 million euros, or $2.2 million. “The licensed brands suffered a bit in the quarter,” said Tassinari.
In the period, capital expenditures totaled 1 million euros, or $1.06 million, and were mostly related to the maintenance and refurbishment of stores.
As of March 31, debt stood at 64 million euros, or $68.2 million, compared with 87.2 million euros, or $96 million, at the end of March last year.