Diesel

MILAN OTB is back in the black.

After a year in 2018 of “voluntary resetting,” 2019 closed on an upward trajectory as the Italian group reported growth in all its brands, from Diesel and Maison Margiela to Marni, Viktor & Rolf and Amiri, as well as production arms Staff International and Brave Kid.

In the 12 months ended Dec. 31, net profit totaled 2 million euros, compared with a net loss from recurring activities in 2018 of 26 million euros.

OTB’s sales were up 6.4 percent to 1.53 billion euros, compared with 1.44 billion euros, and grew in all markets and channels. The retail division was up 9 percent. As a group, OTB opened more than 70 stores around the world.

Earnings before interest, taxes, depreciation and amortization totaled 190 million euros, compared with 41.5 million euros in the previous year. Operating profit amounted to 18 million euros, compared with a negative earnings before interest and taxes of 11 million euros in 2018.

“We are pleased with these results in the first of a three-year plan presented and approved at the end of 2018,” chief executive officer Ubaldo Minelli told WWD. “The goals were particularly challenging, and this first year was important, showing improvements in all markets and channels. The year 2019 was not an arrival point but a beginning; there is still a lot to do.”

Minelli said the turnaround could be attributed mainly to a positive reaction to the product across the brands, but also to a new team, which has focused on priorities. “Assessing each brand, we realized that each had a strong potential that had not been expressed yet,” contended Minelli.

Diesel, which represents 60 percent of OTB’s business, returned to growth, posting a 2.6 percent increase in sales. The brand has been going through a reorganization and streamlining and repositioning of its retail and wholesale channels. Last year it opened 45 stores with a new interior design concept, relocating existing stores and closing non-strategic venues. The direct e-commerce channel was up 24.3 percent. Added to the indirect e-commerce business, the total online division represented more than 11 percent of the label’s sales.

Minelli touted the growth of Diesel despite the closure of some stores. There are now 172 directly operated Diesel stores, 181 concessions and 326 franchised units.

Former Balmain ceo Massimo Piombini joined Diesel on Jan. 27.

The Chapter 11 filing of Diesel U.S. in March 2019 is “a closed chapter,” underscored Minelli. “We have restarted in the U.S., it was a difficult decision but it was brief, we paid all our suppliers and we exited those five or six contracts that landlords did not want to renegotiate and whose costs were no longer sustainable. It was a selective Chapter 11,” he added. “We are in a second phase in the U.S., with plans to invest and develop that market.”

The group’s net financial position improved further, reaching 124 million euros, excluding any IFRS16 effect. In 2018, its net financial position amounted to 111 million euros.

Asked about possible acquisitions, Minelli did not rule them out. “We are focusing on the existing perimeter but  we will evaluate market opportunities if they are in line with the strategic vision of the group,”

Last year OTB took a minority stake in Amiri, and increased its stake in Viktor & Rolf to 70 percent from 51 percent. Amiri reported sales of $58 million last year, but they are not consolidated in OTB, said Minelli. In 2019 Amiri, the Los Angeles-based luxury brand founded in 2014 by Mike Amiri, posted a 49 percent growth in sales.

As reported, the group last fall renewed John Galliano’s employment pact for Maison Margiela. Galliano was appointed creative director of the brand in 2014 and since then, revenues at the Paris-based house have doubled. Last year the brand posted a 36 percent increase, reaching sales of  200 million euros, accelerating in both its retail and online channels. Accessories have grown exponentially and now represent 60 percent of revenues. Retail plans are in the pipeline as in 2020 the brand will open stores in Paris, New York, Shanghai and Osaka. Japan accounts for 32 percent of the brand’s revenues. There are now 32 directly operated and seven franchised stores for the label.

Marni continued to evolve, reaching out to younger, international customers as 50 percent of them are now aged below 35. In 2019, sales increased by more than 8 percent, with accessories accounting for 58 percent of the total. The company opened eight stores, including a flagship in Tokyo’s Omotesando, and the first unit in Maximilianstraße, Munich. There are 28 Marni directly operated stores, 46 concessions and 18 franchised banners.

The retail channel accounts for 50 percent of sales at both Marni and Maison Margiela.

Last year the Viktor & Rolf brand continued to build its alternative business model, generating a retail value of 200 million euros. In addition to the brand’s couture collections and fashion shows, OTB cited bridal collection Mariage, sold in more than 60 retail outlets, and the Tulle capsule collection, distributed in 100 multibrand stores.

Staff International grew by 9 percent to 410 million euros, managing the research and development, production and worldwide omnichannel distribution of licensed brands such as Dsquared2, Just Cavalli and the new entry, Koché. It also is a licensed manufacturer for Maison Margiela, Marni and Diesel (the latter limited to accessories). More than 90 percent of its production is made in Italy.

Brave Kid, specializing in the development, production and distribution of children’s clothing and accessories, reported a 6.4 percent gain to 47 million euros.

Asked to comment on business as the coronavirus spreads globally, Minelli said he was “monitoring on a daily basis, given its rapid evolution. We are setting in motion an action plan to minimize the impact that is to be expected.” He said OTB did not close stores in China, and that it has not canceled events but postponed them to the second half of the year. “We also did not close our offices, postponed trips and we are working remote, via Skype and WeChat.”