MILAN — Giorgio Armani continued to log profits for his namesake company in 2012.

This story first appeared in the November 12, 2013 issue of WWD. Subscribe Today.

The designer in his yearly financial report distributed Monday touted “the efficiency of the business model” on which his group is built and a “clear and consolidated industrial strategy.” In the 12 months ended Dec. 31, Giorgio Armani SpA reported net profits of 194.2 million euros, or $248.6 million, up 7.9 percent compared with 180 million euros, or $250.2 million, in the year before. As first reported in May, sales rose 15.9 percent to 2.09 billion euros, or $2.68 billion, compared with 1.8 billion euros, or $2.5 billion, in 2011. Dollar amounts are converted at average exchange rates for the periods to which they refer.

“I am pleased to announce that our financial performance in 2012 was once again very positive, and marks even greater improvement compared to the already increased levels of growth recorded in the previous year,” wrote Armani, who is also the chairman of the Milan-based firm, in the report. “This is a direct reflection of the efficiency of the business model on which my group is built, which is based on the segmentation and diversity of brands aimed at a varied clientele possessing diverse purchasing abilities. This is an approach that has allowed us to act promptly toward the difficulties arising from the long-running economic crisis that unfortunately continues to have repercussions for the market.”

The group’s brands include Giorgio Armani Privé, Giorgio Armani, Emporio Armani, Armani Collezioni, AJ Armani Jeans, A|X Armani Exchange, Armani Junior and Armani/Casa. “The precise aesthetic with which we operate is reflected in the coherence of the various brands,” said Armani.

Last year, group revenues, including licensed products at retail value, reached a record 7.4 billion euros, or $9.47 billion, compared with 6.73 billion euros, or $9.35 billion, in 2011. “Our strategy of maintaining a valid distribution network based on strong ties with our international partners is the key element that has allowed us to surpass 7 billion euros in turnover including licensed products, and to once again achieve strong growth in revenue and profit margins,” wrote Armani.

The designer highlighted how the success of the company was built over time, “the fruit of everyone’s constant labor,” and how it relies on total control of the “entire supply chain in an efficient manner.” In his letter, Armani noted that “all decision-making centers — from manufacturing to marketing and communications” — contribute to an industrial strategy aiming to “efficiently succeed in responding to the new needs of the company and rapid changes required by it.” He pointed to a commitment to improving creative content and quality “with particular attention paid to the quality/price” ratio.

In the year ended Dec. 31, operating profits climbed 20.5 percent to 339.5 million euros, or $434.5 million, compared with 281.8 million euros, or $391.7 million, in 2011.

Gross operating profit totaled 416.4 million euros, or $533 million, up 19 percent and equal to 19.9 percent.

“All of this allows us to uphold our strategic and operational practices for 2013. We will continue to reinforce our leadership in the traditional markets we operate in and invest in emerging markets, especially in the East, where once again there has been significant return in terms of sales growth, and where a new and exciting social and cultural adventure has begun,” concluded Armani.

In 2012, the company made investments of 157.7 million euros, or $201.8 million, entirely self-funded, compared with 89.3 million euros, or $124.1 million, in 2011. Armani channeled 128.6 million euros, or $164.6 million, for the investments scheduled for 2012, mainly aimed at strengthening the company’s distribution network both in new and established markets. Investments in Europe, accounting for roughly 57 percent of the total, related to the opening of stores in Paris, Vienna, Barcelona, Berlin, Brussels, Rome, Florence and Bari, Italy. The figure also included gaining control of the group’s retail channel in the U.K. and the opening of eight stores in London and other main cities in the region.

The group continued to invest in the Far East, essentially Japan, China and Hong Kong, to which 17 percent of the group’s total financial resources are allocated, opening a Giorgio Armani boutique and two Emporio Armani units in Japan. It also opened seven owned stores in China and Hong Kong. In the U.S., the company opened four Giorgio Armani and eight Emporio Armani stores.

The group opened 104 freestanding stores during the year, and, at the end of 2012, had 2,203 units.

The report said the company’s results for the first quarter of 2013 were “very positive,” and that it expects to continue the development of its distribution network in both emerging and mature markets. A new signature boutique in Hong Kong opened in March on Canton Road. In April, the first Armani/Casa venue opened in Brazil, in São Paulo.

The group closed 2012 with a cash position of 564.8 million euros, or $723 million, compared with 642.8 million euros, or $893.5 million, in 2011, dented by capital expenditures. Equity reached a record level of 1.48 billion euros, or $1.89 billion, compared with 1.37 billion euros, or $1.9 billion, at the end of December 2011. “These figures confirm the group’s structural capacity to generate liquidity and self fund its investment plans,” said the report.

Turnover including licensed products at wholesale value increased by 12 percent to 2.93 billion euros, or $3.75 billion. The Giorgio Armani brand grew 6.8 percent to 877.2 million euros, or $1.12 billion, accounting for 30 percent of turnover. Emporio Armani grew 8.5 percent to 761.5 million, or $974.7 million, accounting for 26 percent of the total. Armani Jeans and Armani Junior grew 24.7 percent and 18.1 percent, respectively. Armani Collezioni rose 6.3 percent and A/X Armani Exchange climbed 17 percent.

In 2012, Europe was the biggest market for the group, with sales of 882.4 million, or $1.13 billion euros. North America posted sales of 654.6 million euros, or $837.9 million, climbing 10.5 percent. The Far East had sales of 558.3 million, or $714.6 million, up 19.8 percent. Italy reported sales of 422 million euros, or $540.1 million, up 5 percent. The Rest of the World area reported revenues of 411.1 million euros, or $526.2 million.

Clothing grew 18 percent to 1.75 billion euros, or $2.24 billion. The year 2012 proved to be an important one for the beauty and fragrance business, and watches and jewelry generated “exceptional results,” particularly in Asia and the Middle East. The category grew 10.1 percent to 256.1 million euros, or $327.8 million. Perfumes and cosmetics gained 3.3 percent to 695.6 million euros, or $890.3 million.

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