MILAN — Fueled by a strong performance in 2021, the OTB group has laid out an ambitious plan for the 2022 to 2024 period, planning to cement its standing in the luxury arena as “The Brave & Alternative Luxury Group, and also open up to other brands that embrace our philosophy,” said chairman Renzo Rosso.
A key step to this end was the acquisition of Jil Sander in March 2021 from Onward Holdings Co. Ltd., and OTB chief executive officer Ubaldo Minelli proudly said that in nine months, the company has already reached break-even and generated cash.
Defining 2021 as “a richly satisfying year during which we reached — and in some cases beat — all our targets in particularly challenging economic and social conditions,” Minelli on Wednesday reported OTB revenues that returned to pre-pandemic levels and that showed significant improvements in terms of profitability.
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In the 12 months ended Dec. 31, net profit amounted to 142 million euros, including non-recurring items. Excluding these, profit amounted to 61.4 million euros, which compares with 900,000 euros in 2020 and 1.6 million euros in 2019.
In an interview with WWD, Minelli attributed this jump to the structural changes made over the past two years, which have helped improve efficiency.
In 2021, turnover, including royalties, totaled 1.53 billion euros (excluding non-recurring revenues of 130 million euros), up 16.2 percent compared with 1.31 billion euros in 2020 and in line with 1.53 billion euros in 2019.
Net sales totaled 1.45 billion euros, up 18 percent compared with 2020, driven by the luxury division, which comprises the Marni, Maison Margiela, Jil Sander and Viktor & Rolf brands.
Minelli said laying the foundations over the past few years has helped the group be in a stronger position that will allow it to target 20 percent year-over-year organic growth and to reach revenues of between 2.4 billion and 2.5 billion euros in 2024.
He underscored that year-over-year 20 percent growth “is more than double what analysts estimate for the sector” and that in 2024 “none of the OTB brands will have reached its full potential, which means we see that goal as a starting point, not a point of arrival.”
“Our production and distribution platforms, cornerstones of our industrial model, will certainly be one of the bases of our development. In 2021, we also decided to reorganize the governance of the supply chain, which is now fully under our responsibility,” Minelli said.
The year 2024 is also one that Rosso in November identified as a possible window for an initial public offering of the group. Asked if there were additional comments, Minelli confirmed OTB is evaluating this option, which would allow it to raise additional funds to strengthen its growth or to continue to be “a non-conventional aggregator of luxury brands.”
Minelli was mum about potential new targets.
In 2021, OTB’s earnings before interest, taxes, depreciation and amortization, net of recurring items, amounted to 258 million euros, up 47 percent compared with 176 million euros in 2020 and up 36 percent on 2019.
Operating profit, net of non-recurring items, amounted to 94 million euros, compared with 13.5 million euros in 2020. In 2019, operating profit amounted to 17.7 million euros.
The luxury brands division surpassed pre-pandemic levels, growing 49 percent on 2020 and 55 percent on 2019, but the group does not break down revenues by brand.
However, OTB reported that Maison Margiela’s sales rose 25 percent in all geographies and all channels, and Minelli added that sales of the brand soared 107 percent in the 2019 to 2021 period. The group in fall 2019 renewed John Galliano’s employment pact for Maison Margiela. The designer was appointed creative director of the brand in 2014.
Minelli also touted the evolution of Diesel in the first year under the creative direction of Glenn Martens, “setting the foundations for a new development phase that will place the brand in the alternative luxury segment, and that is generating the interest of international clients.”
The company has been streamlining Diesel’s distribution and Minelli said the “requalification has been completed.” Sales of the Diesel brand in 2021 represented 45 percent of the total. Last month, Diesel appointed Eraldo Poletto its new CEO for North America. Globally, the brand is helmed by CEO Massimo Piombini.
The first concept store designed by Martens was unveiled at the end of last year in SoHo in New York, and an event will take place there on Friday.
Last September, as reported, Minelli, was appointed CEO of the Jil Sander brand, succeeding Axel Keller. Asked about the potential arrival of a new CEO, Minelli said he will stay on “at least until the complete integration of the brand within the group,” which is expected by the end of the year.
The label is designed by Lucie and Luke Meier.
At group level, OTB opened 38 stores in 2021. Wholesale accounts for a little more than 40 percent of OTB sales.
In China, OTB has 80 stores in 16 cities, and the number is destined to double in the next three years.
In March, the Italian fashion group will open a major retail development project in Shanghai’s JC Plaza mall, located on Nanjing Road.
The four street-front, two-floor stores will house labels Maison Margiela, Jil Sander, Marni and Amiri, and include exhibition spaces and interactive areas. OTB has a minority stake in Los Angeles-based Amiri.
The JC Plaza store will be Jil Sander’s first flagship in Shanghai, and the first in China to be opened after the brand was acquired by OTB.
The company is determined to raise its profile in key markets such as the U.S. and the Asia Pacific region, and China in particular — regions that helped boost OTB’s performance last year and that are expected to help achieve the 2022 to 2024 plan.
Japan is also “one of the most important markets,” said Minelli, accounting for around a quarter of total sales.
OTB has finalized the opening of a branch in South Korea with the goal to directly manage the area, which shows great growth potential for the group, according to Minelli.
OTB also controls production arms Staff International and Brave Kid. Minelli said Staff International is “strategic” for OTB’s business model, and is now “even stronger after the completion last fall of the integration of its logistic activities started two years ago, which allows an increased control over its processes, being more efficient and offering a better service.”
Rosso and Minelli underscored the steps taken to be more sustainable. “We are determined that, increasingly, growth will be zero impact, and in July, we shall be presenting our first sustainability report and our corporate carbon footprint to illustrate the results achieved in the year since the launch of the ‘Be Responsible. Be Brave.’ strategy. It will also lay out the route toward attainment of all the targets we have set in terms of the safeguard of the planet, the attention to products and our social impact on the community,” Minelli said. The goal is to reach carbon neutrality by 2030.
“The values that have always distinguished OTB Group are a commitment to fostering creativity, diversity and courage, speed and agility, support for talent and backing for the whole supply chain,” Rosso said. “These are the factors that will guide our growth over the coming years, with a close eye on sustainability, which for me has always been a long-term investment. This is an irreversible cultural change and the only choice we have if we want to continue to do business in the future. That is why I have inculcated this approach in everyone in the group, in every corporate role, because only then will we succeed in conducting our business sustainably. Entrepreneurs have a great responsibility, and this is the greatest opportunity we have to build a better future for our industry.”
Investments last year amounted to 47 million euros, compared with 40 million euros in 2020, mainly channeled to the development of OTB’s retail network, digital innovation and logistics. In October, OTB became the fourth founding member of the Aura Blockchain Consortium, first initiated by LVMH Moët Hennessy Louis Vuitton in 2019 and then joined by the Prada Group and Compagnie Financière Richemont. The consortium promotes the use of a single blockchain solution open to all luxury brands worldwide to help consumers trace the provenance and authenticity of luxury goods.
OTB has been exploring new business avenues and was the first group to create BVX (Brave Virtual Xperience), a new company internally dedicated entirely to the development of projects, content and products destined for the metaverse, gaming and NFT.
“We are also following the most significant developments in the virtual worlds and the metaverse, so that once again we can be pioneers in a completely new dimension in which we strongly believe,” said Rosso, believing BVX “could transport the entire group toward innovative new business horizons.”
In 2021, Diesel, Maison Margiela and Marni completely restyled their online stores, which led to a 6 percent increase in online direct sales on 2020 and 34 percent growth on 2019. Marni will join the omnichannel Moon platform, followed by Maison Margiela and Jil Sander. Moon was first launched by Diesel in 2020 and it allows a complete and personalized digital shopping experience.
The direct online business represents 7 percent of group sales, while indirect online sales represent 25 to 30 percent of group revenues, Minelli said.