Inside the Max Mara factory in Reggio Emilia, Italy

MILAN — The global economy may be catching a cold, but Italy’s fashion industry is in rude health. At least, that was the picture painted by Italian bank Mediobanca, which Tuesday — on the eve of Milan Fashion Week — presented the latest edition of its annual survey of the Italian fashion industry.

This story first appeared in the February 25, 2016 issue of WWD. Subscribe Today.

Even as much of the headline-grabbing double-digit revenue growth over the past year has come on the back of favorable exchange rates — a trend continuing so far into 2016 — the prospects for key sales drivers such as monobrand stores, tourists and e-commerce remain rosy, researchers from the bank said at a presentation at the foreign press club here.

In 2014, global fashion and luxury goods sales reached 224 billion euros, or $297.9 billion, up 2 percent on a constant currency basis compared with 2013, Nadia Portioli of Mediobanca’s research unit said, citing figures from consultancy Bain & Co. For 2015, the bank’s researchers estimate global fashion and luxury goods turnover increased 13 percent, at current exchange rates, or 1 percent to 2 percent at constant currencies. (Complete figures for last year are not yet available, as listed companies haven’t yet published definitive full year 2015 results.)

In the first nine months of 2015, aggregate sales of the 143 largest Italian fashion companies (those with annual revenues of at least 100 million euros, or $111 million) increased 11.8 percent on the year-earlier period, at current exchange, or 2 percent at constant currencies.

And according to preliminary figures of some Italian listed fashion companies, the last quarter of 2015 “confirmed the performance of the first nine months of the year, thanks always to exchange rates and to tourism,” commented Mediobanca luxury goods analyst Chiara Rotelli.

Dollar amounts have been converted at average exchange rates for the periods to which they refer.

In their overview, Mediobanca’s researchers analyzed everything from revenues and profit margins to employment trends and productivity per employee of the 143 largest Italian fashion companies — including distributors/retailers and producers. (The complete research is available at While this group’s performance was positive, a breakout group Mediobanca calls the “Top15Moda” — Italy’s top 15 fashion and luxury goods groups, in terms of revenues, which includes leading brands such as Armani, Prada and Moncler — outperformed the larger pool on pretty much every indicator available.

For example, over the five-year period 2010 to 2014, sales growth at the 143 largest companies averaged 27.7 percent, compared with 30.8 percent at the top brands. Earnings before interest and taxes, or EBIT, increased 25.1 percent on average in the wider sample but grew 26 percent in the smaller group, and the number of employees grew by 22.7 percent in the 143-company group while jumping 34.2 percent at the top 15 brands.

Looking at single companies, in the five years through 2014, Hong Kong-listed Prada was the leader of the pack in terms of sales growth, with revenues jumping 73.5 percent, followed by Ferragamo, whose sales increased 70.8 percent and then Calzedonia, with revenues up 63.8 percent. In fourth and fifth place come Moncler (up 61.9 percent in the period) and Armani (which rose 59.7 percent).

Overall, the top 143 companies saw revenues in 2010 to 2014 increase by 27.7 percent, reaching 58.1 billion euros, or $77.3 billion; the top 15 alone grew sales in the period by 30.8 percent to 27.8 billion euros, or $37 billion.

In terms of absolute revenues, Italian eyewear maker Luxottica in 2014 was still by far the largest fashion-oriented company in Italy, with sales more than twice those of Prada, which came in second. Rounding out the top five were Armani, Calzedonia and OTB.

Meanwhile in terms of profitability, outerwear maker Moncler lead the pack in 2014, with an EBIT margin of just under 30 percent, followed by Prada (19.9 percent), Ferragamo (18.6 percent), Armani (16.3 percent) and Tod’s (15.6 percent).

In terms of sectors, apparel is the largest, making up almost half of Italian fashion sales in 2014 — the last full year for which data are available — followed by eyewear (32 percent), leather goods (11 percent) and shoes (10 percent).

Looking at the figures, one thing immediately stands out: Italian fashion companies are awash in cash — some six billion euros, or $8 billion, in 2014 at the top 15 alone, up 60 percent on 2010 — and have very little debt. In other words, they have a very strong financial position, especially when compared to other industries. “Fashion is a bit out of fashion: it has lots of liquidity and very little debt,” Portioli said, commenting on the financial solidity of the industry.

Comparisons between Italian fashion companies and Italy’s overall manufacturing sector reveal just how better off makers of fine clothes, accessories and apparel truly are. EBIT at the top 15 fashion companies is double that compared to the rest of Italy’s manufacturing sector, Portioli said. In terms of sales growth, profitability, financial solidity and liquidity, fashion manufacturers come out on top. “Fashion beats industry 4 to 0,” Portioli said.

The fashion industry is also a good supplier of work opportunities, Portioli said. “Fashion firms are hiring. They are an excellent place to send a CV.” But the growth in job opportunities is very clearly on the retail/sales side (and outside Italy), and not on the production side, which is being increasingly outsourced (although not necessarily abroad).

Gabriele Barbaresco, head of Mediobanca’s research division, said during the presentation that the “real value [in fashion] is in design, development and distribution” while the production process has “become the poor area.” Barbaresco pointed out that distribution is where the biggest margins are made. Unsurprisingly, therefore, most job growth in the fashion industry is coming in sales/points of sale.

Italy’s fashion industry also looks mostly safe in an uncertain world. Asked about risks to producers, Barbaresco said that although global economic prospects are uncertain, there remain growth opportunities in developed markets, where there are also “large stocks of accumulated wealth,” and in emerging markets, where there are entire population groups hungry for fashion goods. “I don’t see any elements which can threaten this sector’s long-term sustainability. I don’t see it as a sector that can be shaken by technological innovation. It is not on the frontiers of technology, so it won’t be brushed aside by technological innovation. In fact, some technologies — like 3-D printing, for example — can help.”

Mediobanca also presented a few figures from France’s fashion and luxury goods industry, as a comparison. There were few surprises: France’s top 10 luxury goods groups in 2014 had aggregate sales of some 56.1 billion euros, or $74.6 billion, compared with 23.4 billion euros, or $31.1 billion, at Italy’s top 10 — a clear demonstration of how concentrated the French fashion and luxury goods industry is compared to Italy’s. But there are similarities, too. For example, in terms of sales growth, over the 2010 to 2014 period, Italy’s fashion industry saw sales increase some 27.7 percent, just shy of the 30.8 percent growth achieved by the French – figures that would seem to prove that the often-cited weakness of Italy’s fashion companies (their size) may not be such a weakness after all.

“We [Italian fashion companies] are different from the French,” Barbaresco said. “While size can create synergies, I don’t see it as a model that has great appeal. Our [fashion] companies are smaller, more focused. The numbers say that our model works, with all the upsides and downsides.”

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