MILAN — A mixed performance by channel and geographic market dented Aeffe SpA’s profitability, while revenues grew in the first nine months of the year.
A slowdown in the Italian fashion group’s local market and in its wholesale channel was offset by global growth and a gain in its retail division.
In the period ended Sept. 30, net of the new IFRS 16 accounting standard, net profit at the Italian fashion group fell 16.7 percent to 13.4 million euros. This compares with 16.1 million euros in the same period last year. Revenues rose 1.7 percent to 269 million euros, compared with 264.6 million euros in the same period last year.
Earnings before interest, taxes, depreciation and amortization were down 9 percent to 33.8 million euros, compared with 37.1 million euros, last year.
Operating profit dropped 11.2 percent to 24.6 million euros.
Aeffe, which is listed on Italy’s Star segment of the Italian Bourse, includes the Alberta Ferretti, Philosophy di Lorenzo Serafini, Moschino and Pollini brands and produces and distributes the Jeremy Scott and Cédric Charlier labels.
“In an uncertain market environment, characterized by turbulence in markets of importance for us, we positively evaluate the results of the first nine months and we believe that the investment plan implemented since last year across R&D, production and marketing departments will contribute to strengthen the strategic positioning of our brands at international level,” said executive chairman Massimo Ferretti.
Revenues of the ready-to-wear division were down 1 percent to 200.9 million euros, while sales of the footwear and leather goods division increased by 9.1 percent to 96.7 million euros, mainly driven by the Moschino brand.
The retail channel was up 9 percent to 71.6 million euros, accounting for 26.6 percent of revenues, and including the group’s online sales, which also showed a positive trend. Aeffe last year partnered with Triboo, a company listed on Alternative Investment Market Italia, to launch a new and global omnichannel distribution project, taking its online and off-line sales channels in-house. The e-stores of Alberta Ferretti, Moschino and Philosophy di Lorenzo Serafini were previously powered by YNAP.
In the period, the number of directly operated stores was relatively unchanged, totaling 63 compared with 64 at the end of 2018. Aeffe closed some franchised stores in the period as a consequence of a strategic repositioning, especially across Asian markets, for a total of 176 units compared with 184 in full 2018.
Despite a rationalization of the wholesale channel, the division showed “signs of improvement” with the fall 2019 season. In the nine months, it was down 1.5 percent to 187.5 million euros, representing 69.7 percent of the total. The channel was hurt by a downturn in the second and third quarters as a result of the fall 2019 sales campaign trend. The spring 2020 sales campaign, compared with the previous fall 2019 season, was up 7 percent, reflecting an improving trend in the wholesale business.
In the nine months, sales in Italy were down 2.9 percent to 125.2 million euros, due to the weakness of the wholesale channel, offset by a positive performance of the retail division. The Italian market accounted for 46.5 percent of sales. That incidence decreased to 37 percent net of the effect of sales to foreign customers in Italy.
Sales in Europe rose 2.2 percent to 62.3 million euros, representing 23.2 percent of the total.
In Asia and in the Rest of the World, the group’s sales totaled 67.5 million euros, up 9.9 percent, and accounting for 25.1 percent of the total, especially driven by Greater China and South Korea, which posted growth of 8 percent and 35 percent, respectively.
Sales in America rose 5.4 percent to 14 million euros, representing 5.2 percent of the total.
Sales at directly operated stores increased 9 percent and contributed to 26.6 percent of total revenues. Royalties were up 15.9 percent and represented 3.7 percent of the total.
As reported, at the end of September, Stefano Secchi succeeded Gabriele Maggio as chief executive officer of Moschino, joining the Milan-based company from Etro, where he was commercial director. Maggio is now helming Stella McCartney.
Under Jeremy Scott’s creative direction, Moschino has been on an upward trajectory.
In July, Moschino opened a 1,000-square-foot, long-term pop-up shop in Manhattan at 635 Madison Avenue on the northeast corner of 59th Street. The new outpost complements the brand’s existing location at 73 Wooster Street in SoHo. Scott will be staging his pre-fall 2020 women’s Moschino show Dec. 9 in the subway cars at the New York Transit Museum, the country’s largest museum devoted to urban public transportation history.
As of Sept. 30, the group’s net debt stood at 42.2 million euros compared with 39.1 million euros at the end of September last year, a change attributable to an increase in working capital.