Moschino RTW Fall 2019

MILAN — “This was one of the best years in our history,” Marcello Tassinari, general director of Aeffe SpA, told WWD on Tuesday. And he had good reason to be upbeat — the Italian fashion group closed 2018 with a 46 percent gain in net profits. In the 12 months ended Dec. 31, net earnings climbed to 16.7 million euros, compared with 11.5 million euros in 2017.

Sales rose 10.9 percent to 346.6 million euros, compared with 312.6 million euros in 2017. At constant exchange rates, revenues were up 11.2 percent. Sales of the ready-to-wear division amounted to 265.6 million euros, up 10.8 percent. The footwear and leather goods division was up 9.3 percent to 118.3 million euros.

Executive chairman Massimo Ferretti touted the company’s “effective strategy,” based on “significant investments in the stylistic research for the portfolio’s brands, the strengthening of business relationships with the wholesale network and a calibrated retail presence,” and trumpeted an efficient business model. “We are pleased to confirm a satisfactory progression of margins, more than proportional to the growth in turnover. For the current year, we hope for a path of further development for our brands.”

Aeffe, publicly listed on Italy’s Star segment of the Italian Bourse, comprises the Alberta Ferretti, Philosophy di Lorenzo Serafini, Moschino and Pollini brands and produces and distributes the Jeremy Scott and Cédric Charlier labels.

In 2018, earnings before interest, taxes, depreciation and amortization were up 18.5 percent to 43.3 million euros, with an incidence on sales of 12.5 percent, lifted by a growth in sales and a lower incidence of operating costs.

Operating profit climbed 30.6 percent to 29.6 million euros.

Sales in Italy were up 10.7 percent to 168.5 million euros, representing 48.6 percent of total revenues. That incidence decreased to 37 percent net of the effect of sales to foreign customers made in Italy, noted Tassinari. Indeed, the region was lifted by organic growth in both its wholesale and retail channels, which both benefited from local customers and high-end tourist flows.

Sales in Europe rose 4.5 percent to 80.3 million euros, accounting for 23.2 percent of total revenues, a growth driven especially by a solid performance in the U.K., Germany and Eastern Europe.

In Asia and in the Rest of the World, sales totaled 80.1 million euros, up 23.2 percent from the previous year, and representing 23.1 percent of total sales. The boost was driven by Greater China, which posted a 27.8 percent increase. “We’ve seen a strong growth in China and we are confident it will continue,” Tassinari said.

Sales in the Americas were down 4.8 percent to 17.7 million euros, contributing to 5 percent of total sales, and impacted by the lackluster performance of department stores. At constant exchange, sales decreased 1.3 percent. “This is the only region where we are not growing,” Tassinari said. That said, and to try and offset the slow wholesale performance, the company is investing in its online business there and negotiating the opening of a Moschino store in both Miami and in New York by the end of the year.

Tassinari underscored that all of the group’s collections saw organic increases last year, as well as the online channel, which accounted for 7 percent of sales. As reported, in 2018 Aeffe partnered with Triboo, a company listed on Alternative Investment Market Italia, to launch a global omnichannel distribution project, taking its online and off-line sales channels in-house. The Italian fashion group created a dedicated team to focus on the online stores of Moschino, Alberta Ferretti and Philosophy di Lorenzo Serafini. The three brands’ online stores were previously operated by the Yoox Net-a-porter Group. “We are very happy with the results,” Tassinari said.

Wholesale sales increased 13.1 percent to 247.8 million euros, accounting for 71.5 percent of the total. Retail sales were up 4.5 percent to 87 million euros, representing 25.1 percent of total revenues. Royalties recorded a 15 percent increase to 11.6 million euros.

At the end of 2018, the company had 64 directly operated stores, one unit more compared with the end of 2017, as part of a selective development of its retail network. Aeffe also counted 184 franchised stores, one unit less compared with the end of 2017. During the year, the company strategically repositioned stores, especially across Asian markets.

As of Dec. 31, the group’s net debt stood at 31.3 million euros, compared with 50.6 million euros at the end of December 2017, mainly attributable to the operating cash flow improvement.

Asked about potential challenges in 2019, Tassinari said macroeconomic issues were a concern, ranging from the U.S.-China tariffs and import duties; Brexit and the uncertainties in France, which “all create a general sense of worry and impacts consumers.” The executive remained positive, also in light of a 6 percent increase in spring orders.

Aeffe is also monitoring the evolution of markets with strong potential, in particular in the Far East, “evaluating the optimization of the franchise network development plan and selective openings of monobrand directly operated stores.” The group also expects “further synergies deriving from the multichannel distribution approach” such as the integration of the various sales channels, physical and online, also with a view to customizing the customer experience.

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