MILAN — Aeffe SpA on Friday reported a return to profitability and a 30.4 percent gain in revenues in the first half of the year, exceeding analysts’ consensus. By early afternoon, the fashion group’s shares on the Milan Stock Exchange were up 6.08 percent at 1.71 euros.
Listed on the STAR segment of Borsa Italiana, Aeffe comprises the Alberta Ferretti, Philosophy di Lorenzo Serafini, Moschino and Pollini brands.
In the six months ended June 30, the group swung to a profit, reporting net earnings of 17.4 million euros compared with a net loss of 12.5 million euros in the first half of 2020.
Double-digit growth in all its markets boosted sales, which rose 30.4 percent to 155 million euros compared with 118.9 million euros in the same period last year. The ready-to-wear division contributed more than 67 percent of sales.
In the second quarter, sales climbed 76 percent to 74.9 million euros compared with the second quarter of 2020, exceeding pre-COVID-19 pandemic levels. In the second quarter of 2019, revenues amounted to 71.1 million euros.
Earnings before interest, taxes, depreciation and amortization amounted to 20.1 million euros compared with 600,000 euros in the first half of 2020.
The growth reflected the increase in revenues and the cost containment measures implemented to face the consequences of the pandemic, ranging from re-negotiating rents and postponing costs related to advertising and public relations to requesting the social safety systems put in place by the governments in different countries.
Compared with analysts’ consensus, revenues were up by 21 percent, EBITDA was 69.2 percent higher and net profit was substantially double market estimates.
“We are very satisfied with the performance of the first semester, featuring a significant increase in revenues and marginality for all our brands,” said executive chairman Massimo Ferretti. “Furthermore, on the strategic side, we believe that the acquisition of full control of Moschino and the relative integrated management will be important catalysts for the future development. Looking at the second part of the year, we are therefore positive and we renew our enthusiasm to face the upcoming challenges with initiatives aimed at increasingly enhancing the distinctiveness of our brands and the evolutions of the current context.”
In the first half, operating profit totaled 7.6 million euros, compared with an operating loss of 12.8 million euros in the same period last year.
In Asia and in the Rest of the World area, the group’s sales totaled 34.9 million euros, amounting to 23 percent of the total and recording an increase of 39.1 percent. The Greater China area and the Middle East drove growth, reporting 50 and 68 percent increases respectively. In particular, in the second quarter, revenues grew by 79 percent compared with the second quarter of 2020.
Sales in America rose 79.7 percent to 10.3 million euros, contributing 6.6 percent of the total, lifted by the strong performance of all distribution channels. In the second quarter of 2021, sales grew by 272 percent compared to the corresponding period of 2020, surpassing the pre-pandemic levels.
Revenues in Europe grew 34.9 percent to 51.2 million euros, contributing 33 percent of the total, boosted by a positive trend in Germany, the U.K. and Eastern Europe in the wholesale channel. The retail channel continued to be partially influenced by the limited flow of tourists. The second quarter of the year showed a 68 percent increase compared with the second quarter of 2020.
In the first half, sales in Italy grew 17 percent to 58.7 million euros, lifted by the “excellent” results achieved at wholesale and online, with a 63 percent gain in the second quarter.
Globally, the wholesale channel was up 39.6 percent to 121 million euros, accounting for 78.1 percent of the total. In the second quarter, wholesale revenues amounted to 56.1 million euros, up 80 percent.
The retail channel, including Aeffe’s direct online platform, posted an increase of 3.1 percent to 28 million euros, accounting for 18 percent of the total, showing a good recovery in the last month of the semester compared to the first five months of the year thanks to the progressive easing of the restrictions to international travels. The company touted an “excellent” performance across all brands and geographies of its e-commerce channel. In the second quarter, retail sales climbed 72 percent to 15.8 million euros.
As of June 30, the company counted 57 directly operated stores and 138 franchised units.
Royalty income grew 20.2 percent to 6 million euros.
Capital expenditures in the first half amounted to 1 million euros, mostly related to refurbishment and IT technologies.
The group has acquired the 30 percent stake in Moschino it did not own from Sinv Holding SpA, Sinv Real Estate SpA and Sinv Lab Srl, paying more than 66.5 million euros. The sum is split in 30 million euros at the same time as the transfer of the shares, while the remainder will be paid to the sellers by Nov. 30. Aeffe has used and will use cash on hand, existing credit lines and new medium to long-term loans to pay for the acquisition.
“Moschino is strategic for us and this is an important step in our medium-long-term growth strategy,” Ferretti told WWD at the time. “Having full control over the Moschino brand, we are now in the best conditions to manage all activities related to the brand’s value chain, from product to quality and with positive effects on image, distribution and communication. This is fundamental.”
In 2020, the Moschino brand posted revenues of 215.4 million euros, while on average, over the last five years, it registered sales of 229.4 million euros. Royalty revenues amounted to 63.2 million euros with shareholders’ equity of 109 million euros at the end of the year.
As of June 30, Aeffe’s net financial debt with IFRS 16 effect stood at 127.2 million euros compared with 150.6 million euros at the end of June last year. Net of the IFRS 16 effect, it amounted to 45.1 million euros compared to 62.5 million euros.