MILAN — Italian fashion group OTB saw higher profits and sales last year even as it focused on integrating Marni, developing Diesel through the work of artistic director Nicola Formichetti and naming John Galliano to helm Maison Margiela.
In the year ended Dec. 31, the Italian fashion group reported net profits grew almost fourfold to 5.5 million euros, or $7.3 million, compared with 1.2 million euros, or $1.6 million, in 2013.
Earnings before interest, taxes, depreciation and amortization dropped 15 percent to 117.4 million euros, or $156.1 million, compared with 138 million euros, or $182.1 million, due to currency fluctuations.
Revenues in 2014 were in line with 2013, closing at 1.56 billion euros, or $2 billion, compared with 1.57 billion euros, or $2.07 billion, the previous year.
Dollar figures were converted from the euro at average exchange rates for the periods they refer to.
“A large part of the drop in EBITDA is to be attributed to the exchange rates last year compared with 2013,” chief executive officer Riccardo Stilli told WWD. He cited the yen, in particular. “Japan, which accounts for almost 20 percent of our sales, has always played a big role and continues to do so,” he said.
The group controls Diesel, Margiela, Marni and Viktor & Rolf, as well as its production arm Staff International and Brave Kid. The arrival of Galliano in the fall at Margiela, owned by OTB and managed through French firm Neuf, has “already has given a significant injection of appeal and to sales globally,” said Stilli.
The group last year reviewed its distribution strategy for Diesel, elevating the brand, streamlining its wholesale accounts and renovating existing stores, which impacted its performance. With a pun on Diesel’s motto “Only the Brave,” Stilli said he “would challenge anyone to cut a retail value of more than 230 [million euros] or 240 million euros [$306 or $319 million] in sales.” Diesel has just closed its Fifth Avenue unit in Manhattan and is working on a new flagship on Madison Avenue, on the corner of 59th Street, which is slated to open by the end of the year.
New Margiela stores opened in Milan’s Via Sant’Andrea and in San Francisco. A new Marni boutique will open in Milan’s via Montenapoleone at the end of May. Stilli said there is a “good balance” across all brands between retail and wholesale, each accounting for around 50 percent of total sales.
Stilli also trumpeted the integration of Marni, whose acquisition was finalized in February 2013, and which recorded sales of 130 million euros, or $173 million. The brand recently signed a deal with OTB’s Staff International for its men’s line and with Brave Kid for a girls’ collection.
Stilli said OTB is increasingly offering integrated services and “very strong synergies” to all its brands, centralizing its activities and that the effect will be even more visible in 2015.
He noted that “one of the goals of OTB was to balance the brands because the group was highly dependent on Diesel, while there is a diversification of the risk with a varied portfolio. We are well-positioned on different [price] ranges.” Diesel today accounts for 65 percent of group sales.
The executive touted a “good cash flow” of 105 million euros, or $134 million, an increase of 36 million euros, or $48 million, compared with 2013. The company has a new credit line of 200 million euros, or $266 million, and Stilli said the group is relying on “firepower” and is “looking around at brands with an interested eye. We are evaluating opportunities, but there is nothing concrete, we are still in a scouting phase for brands of a certain size, nothing below Diesel in terms of positioning, and that would fit with our portfolio.”
Last year, geographically, Asia accounted for more than 25 percent of sales; the Americas represented around 20 percent, and the rest of the world the remaining 55 percent.
For 2015, Stilli envisioned a mixed scenario, pointing to Asia and Japan in particular as showing more growth.
On a separate note, Stilli said restoration works on the Rialto bridge in Venice have started, supported by the group with an investment of 5 million euros, or $6.6 million. Works are expected to be completed in 18 months.