MILAN — The COVID-19 pandemic impacted Aeffe SpA’s bottom line and revenues in 2020, but the Italian fashion group’s management is confident the initiatives and strategies set in place last year will reap benefits in 2021.
In the 12 months ended Dec. 31, adjusted net loss, net of non-recurring costs of 5.1 million euros, totaled 16.3 million euros, compared with a profit of 11.7 million euros in 2019. The reported net loss amounted to 21.4 million euros.
Revenues declined 23.4 percent to 269.1 million euros, compared with 351.4 million euros in 2019. Sales of the ready-to-wear division amounted to 197.4 million euros, down 24.7 percent compared to 2019. Revenues of the footwear and leather goods division decreased 16.2 percent to 107.4 million euros.
“In a year marked by the pandemic, the group has demonstrated effective management capacity, both financially and in terms of marketing,” said Massimo Ferretti, executive chairman of the group, which controls the Alberta Ferretti, Philosophy di Lorenzo Serafini, Moschino and Pollini brands. “Significant new initiatives were launched in 2020 that will complement the future development strategy, from investments in virtual showrooms optimization to growth on e-commerce platforms, together with successful travel retail projects in Greater China. We are looking forward to massive vaccination campaigns in all reference markets and in an upcoming newly found normality for a new phase of recovery, leveraging the positioning of our brands and the good response to the fall 2021-22 collection.”
Managing director and chief financial officer Marcello Tassinari in an interview pointed to signs of improvement in the last quarter of 2020 and the resilience of the group’s brands in all markets. “We are very satisfied with the fall 2021 sales campaign,” he observed, expecting growth in Europe, in particular in the U.K., given the advanced status of the vaccinations, in the U.S., the Middle East and China, “the locomotive of the world, and we want to catch that train, we are responding to that market and are deeply motivated.”
Targeting local Chinese customers, Aeffe is investing in the duty-free business in airports and in places such as Sanya, on the island of Hainan. The group has opened a Moschino duty-free shop in Sanya with its local partner and is planning the rollout of four additional units in China by the end of the year. “Moschino has all the characteristics to perform well in China,” Tassinari said.
The group will continue to focus on strengthening its online business, digital communication and distribution in strategic markets such as the Far East. “Despite the uncertainty of these times, we are confident that the group will emerge stronger from this situation,” he noted, while adding that Aeffe performed above analysts’ expectations, as the general consensus was for a decline in sales of between 25 and 26 percent.
In 2020, adjusted earnings before interest, taxes, depreciation and amortization amounted to 8.5 million euros, net of an extraordinary write-down of raw materials inventories of 4 million euros due to the COVID-19 pandemic, compared to 53.1 million euros in 2019. Reported EBITDA totaled 4.5 million euros.
Adjusted operating loss, net of non-recurring costs of 5.1 million euros, amounted to 19.5 million euros, compared to an operating profit of 25.1 million euros in 2019.
While all markets in the year showed a decline compared to the previous year, they all recovered in the second half.
Revenues in Italy decreased 24.2 percent to 121.9 million euros, impacted by the pandemic in both the retail and wholesale channels.
Sales in Europe were down 4.9 percent to 82.6 million euros, representing 30.7 percent of the total, and showing especially good performances in Germany and Eastern Europe.
In Asia and in the Rest of the World, revenues amounted to 53.5 million euros, accounting for 19.9 percent of the total, and reporting a 37.8 percent decrease.
The Far East was more impacted by the restrictions, while the Middle East experienced a less significant decline. The Greater China area reported a 35 percent decrease in 2020, recovering in the last quarter of the year, with an evident upturn in store traffic.
Sales in America totaled 11 million euros, contributing to 4.1 percent of the total, and posted a decrease of 37.3 percent.
The COVID-19 pandemic affected the group’s distribution channels. The wholesale channel declined by 20 percent to 195.1 million euros, contributing to 72.5 percent of the total. Retail sales were down 32.3 percent to 63.5 million euros. In the fourth quarter, sales fell 39.4 percent in the wake of the new restrictions implemented by the main European countries.
Royalty income, representing 3.9 percent of consolidated sales, declined by 23.5 percent to 10.4 million euros compared to 2019.
The company implemented a cost containment strategy which largely materialized from the second quarter of 2020. Cost savings included personnel, rental and travel costs. More specifically, in the year the savings in fixed and personnel costs totaled 22.8 million euros, corresponding to a decrease of 14 percent.
Capital expenditure in 2020 amounted to 5.4 million euros, mainly channeled into the completion of a new warehouse and software purchases.