MEXICO CITY — Grupo Axo, the fast-growing Mexican apparel licensor, expects to see a 25 to 30 percent increase in revenues from its recent joint venture with PVH to sell the Calvin Klein, Warners and Arrow brands in Latin America’s second-largest market.
The tie-up, unveiled in May, “added a lot to our business and will bring many fabulous brands and important synergies,” Grupo Axo investor relations executive Roberto Velasco said.
Synergies from the venture, which will see the two firms create a new entity majority owned by Axo, will begin showing in the fourth quarter when Axo will start distributing CK, Speedo, Warner and Olga in Mexico.
Velasco noted the transaction’s full logistic, shipping and financing synergies will begin showing in 2017 when the firm’s revenues should rise by 25 to 30 percent to an undisclosed sum.
This year, Axo expects revenues will grow around 15 percent, driven by strong sales of its newly acquired Multibrand Outlets Stores and the brands Victoria’s Secret Beauty and Accessories, Tommy Hilfiger, Bath & Body Works and Rapsodia, Velasco said. The Mexico City-based company licenses and distributes nearly 20 foreign lifestyle brands in Mexico and South America, including Abercrombie & Fitch, Brooks Brothers, Emporio Armani and Crate & Barrel.
In 2015, the company reported a 58 percent jump in operating profit to 234 million pesos, or $13 million at current exchange, on a 78 percent rise in revenues to 4.5 billion pesos, or $238 million, thanks largely to the purchase of a 50 percent stake in Multibrand last April, which added nearly 100 off-price shops to Axo’s existing network. The company has the option to buy the remaining 50 percent at a later date.
Based on Velasco’s forecasts, Axo’s revenues could rise to near $300 million by 2017.
Axo, which more than doubled its headcount to 3,700 workers last year, expects to add roughly 35 standalone stores this year after a similar number of openings in 2015, according to Velasco.
One key opening will be a Victoria’s Secret flagship in Mexico City’s Antara luxury mall next month. Up to now, Axo has only operated accessories shops for the brand.
Axo, which operates 2,800 doors, is facing rising competition in Mexico and Latin America.Velasco claimed long-running relationships with department stores and a growing presence in the booming shopping-mall sector give it more negotiating clout than rivals.
“When a shopping center is looking for a new investment project, they ask us how many stores we can open there,” Velasco said. “We are an anchor retailer for many malls so we can pay lower floor rights and negotiate better terms.”