MILAN — Italian online fashion retailer Yoox Group SpA on Wednesday said net profit in the third quarter was unchanged compared with a year ago, at 700,000 euros, or $1 million, due to higher depreciation and amortization costs for investments in new technology, new offices and the start-up of operations in China.
Profitability before these nonrecurring expenses increased in the third quarter, with EBITDA, or earnings before interest, taxes, depreciation and amortization, up 31.1 percent on the year-earlier period, to 3.9 million euros, or $5.5 million. Driving the gains was a 35 percent jump in quarterly sales to 73.2 million euros, or $103.2 million, which were fueled by consumers who continued to snap up apparel and accessories on the firm’s multibrand yoox.com and thecorner.com Web sites as well as on monobrand online stores operated by Yoox.
Dollar amounts have been converted at average exchange rates for the periods to which they refer.
In a statement released after the close of trading in Milan, where the company is listed, Yoox management said the investments, especially in its new global operations and distribution platform — which has been operational since the end of September — will support “the group’s future growth and bring with it an increase in operational efficiency, with a resulting improvement in expected profitability in the coming years.”
Management also gave an upbeat outlook for the rest of the year: “In light of the positive performance of the online retail market and the demand for luxury goods, we are confident that, in the fourth quarter of the year, the group will again achieve net revenue growth in line with market expectations.”
Growth is expected to continue coming from “both the multibrand business line, which will benefit from the recent openings in new markets, and the monobrand business line, partly thanks to the new online stores launched in the first nine months of the year,” the company said.
In regard to consumer spending on fashion in the current economic climate, Yoox said the company is “carefully monitoring its customers’ buying habits, which, at the moment, do not seem to be affected by the feared deterioration in the general economic environment, with customer demand remaining strong not only in the U.S. and Asia, but also in Europe and Italy.”
International sales are increasingly important to Yoox; the company said in the third quarter, North America became its largest single market for the first time, representing some 20.4 percent of total sales. While Yoox didn’t provide a breakdown of geographic performance for the third quarter, for the January-September period, it said that “all the key markets in which the group operates reported growth compared with the first nine months of 2010, confirming balanced revenue growth, increasingly weighted towards international expansion.”
The North American market recorded “significant growth” of 37.5 percent on the year-earlier period, Yoox said, “despite the effects of the unfavorable exchange rate.”
In the nine months ended September, Yoox reported net income of 3.6 million euros, or $5.1 million, a 9.9 percent decline on the same period of 2010, impacted by the higher depreciation and amortization costs that affected net income growth in the third quarter, the company said.
Higher financial expenses stemming mainly from unfavorable exchange rate movements (especially the depreciation of the U.S. dollar), and, to a lesser extent, decreased financial income “resulting from lower cash investments” also weighed on the bottom line, Yoox said.
However, EBITDA grew by 20.2 percent, to 11.8 million euros, or $16.6 million, and revenues, at 204.4 million euros, or $288.2 million, jumped 35.6 percent compared with a year ago.
The multibrand business, which includes yoox.com and thecorner.com and represents 75 percent of group sales, posted consolidated net revenues of 152.4 million euros in the period, or $214.9 million, up 31.4 percent on the previous year. The monobrand business generated net revenues of 52 million euros, or $73.3 million, up 49.7 percent, due to the “strong performance” of the 23 stores open at the end of 2010, as well as to strong growth from the five new online stores — including brunellocucinelli.com and moncler.com — opened in the nine-month period.
Looking ahead, Yoox said it will launch barbarabui.com in Europe, the U.S. and Japan, in the first quarter of 2012, while trussardi.com will go live in December.