MILAN — Aeffe’s investments in Moschino are paying off as the Italian fashion group reported a 10 percent increase in revenues to 277.1 million euros in the first nine months of the year, lifted by growth in all markets, in particular in the U.S., and despite a slowdown in the Far East, dented by the ongoing restrictions in China.
“Despite the difficult economic situation, the group recorded double-digit growth in revenues, both in the prêt-à-porter segment and in footwear and leather goods, with a positive trend for all brands in most markets,” said Massimo Ferretti, executive chairman of Aeffe, which comprises the Alberta Ferretti, Philosophy di Lorenzo Serafini and Pollini brands, in addition to Moschino.
“The group is operating in a prompt and determined manner, implementing a series of initiatives, including a plan of significant investments for the strategic renewal of Moschino in terms of brand positioning and reorganization on the retail front in China, pending a relaxation of current restrictions and with expectations of benefits also in terms of profitability already in 2023. By carefully monitoring the dynamics of the markets, we remain focused on our long-term strategy aimed at strengthening the distinctiveness of our brands.”
As reported, the company took full control of Moschino last year, paying 66.6 million euros for the 30 percent stake in the brand it didn’t own. It also acquired the license to produce and distribute the Love Moschino collections of women’s apparel in house for 3.6 million euros.
Last year, Aeffe SpA also took control of Moschino’s distribution in mainland China, signaling the increasing relevance of that market for the label. This involved around 20 stores, which have been operated for the past 10 years by Scienward Fashion and Luxury (Shanghai) Co. Ltd.
This led to the opening of 21 directly operated stores in China, also significantly changing the approach to the local market. The related benefits deriving from the transaction were only partially recorded as retail revenues starting from the third quarter of 2022, which however were affected by the restrictions taking place to reduce the spread of COVID-19 infections.
In the nine months ended Sept. 30, retail sales rose 29.5 percent to 65.8 million euros.
The wholesale channel continues to represent the bulk of sales, representing 72.2 percent of the total and growing 5.6 percent to 200.1 million euros, despite the reorganization of Moschino’s distribution in China.
In the nine months, net profit totaled 4.7 million euros, which compares to 23.2 million euros in 2021, but 15 million euros last year were derived from extraordinary tax benefits.
Sales of ready-to-wear were up 9.8 percent to 183.1 million euros, while revenues of the footwear and leather goods division amounted to 128.9 million euros, a 17.2 percent increase.
Royalties grew 14.6 percent to 11.2 million euros.
Earnings before interest, taxes, depreciation and amortization amounted to 37 million euros, compared with 36 million in 2021, up 2.7 percent compared to 36 million euros in the same period last year. The performance was affected by the ongoing restrictions in China, denting margins and following the costs incurred for the reorganization of local distribution. “The group is confident that the benefits deriving from the direct management of the Chinese market will materialize in line with the loosening of the restrictive measures,” Aeffe stated.
Operating profit decreased 19.3 percent to 14.1 million euros compared with 17.5 million euros last year.
Sales in Italy rose 13.1 percent to 116.1 million euros, representing 41.9 percent of the total, boosted by the strong retail performance, up 26.6 percent. The wholesale channel in the country also recorded a 7.8 percent increase.
Sales in Europe, representing 33.1 percent of turnover, reported an increase of 13.6 percent to 91.7 million euros compared to 2021, driven by the significant acceleration of the retail channel, which showed an increase of 81.6 percent compared to the same period last year.
In Asia and in the Rest of the World area, the group reported revenues of 49.1 million euros, down 2.2 percent, and representing 17.7 percent of the total. This decrease was mainly driven by the above mentioned changes in the wholesale channel in China and the disruptions caused by the health emergency.
Sales in America were up 22.3 percent to 20.3 million euros, accounting for 7.3 percent of the total, lifted by a 41.4 percent increase at wholesale.
As of Sept. 30, net working capital amounted to 113.5 million euros compared to 83.1 million euros at the end of September last year.
Investments in the first nine months equaled 7.4 million euros, mainly channeled into works on third party assets and software purchases.
Net debt amounted to 220.3 million euros, compared to 140.3 million euros at the end of September 2021. Net of the IFRS 16 effect, it was equal to 134.4 million euros, compared with 61.3 million euros at the end of September last year. Excluding the financial transactions relating to the new Moschino structure finalized in 2021, the transaction in China and the IFRS 16 effect, the net financial position would have been equal to 48.6 million euros.