Moschino RTW Spring 2017

MILANAeffe SpA, the owner of Moschino, Alberta Ferretti and Pollini, reported solid sales and profit growth in the first nine months of the year on the back of a robust performance at its ready-to-wear division and strong demand for Moschino in international markets.

In a statement released during trading hours in Milan, where the company is listed on the STAR segment of Borsa Italiana, Aeffe said that in the January-to-September period total revenues reached 213.8 million euros, or $239.4 million at current exchange, up 3.8 percent on the year-earlier period, at constant exchange rates.

Net profit for the period jumped more than 200 percent, to 4.9 million euros, or $5.5 million, as the company — which also produces and distributes collections for Cédric Charlier and Jeremy Scott — continued to benefit from the effects of its restructuring, Marcello Tassinari, the company’s managing director and chief financial officer, said in an interview after results were posted.

Tassinari said the restructuring led the company to flatten its cost structure so as to be able to leverage increasing revenues in a more than proportionate manner. “In 2014, we said that the effects of the reorganization, which included a change of creative direction in Moschino, would be clear and that the key driver, with costs tightly under control, would be sales.”

Looking closer at the company’s operations, Aeffe said turnover at its prêt-à-porter division — which makes up some 70 percent of total sales — reached 163.9 million euros, or $183.6 million, up 3.7 percent, at constant currencies, compared with the year-earlier period.

In releasing the results, executive chairman Massimo Ferretti pointed out that the fall collections currently in the stores were obtaining “good results” and that the order intake for next spring was up by 5 percent.

Despite the continued economic uncertainty in Italy, the company’s largest single market (representing about 45 percent of sales), Aeffe reported a 4.2 percent increase in Italian revenues, to 95.6 million euros, or $107.1 million. Sales in Europe (excluding Italy and Russia), which make up some 22 percent of consolidated sales, expanded by 5.3 percent, to just over 46 million euros, or $51.5 million. In Russia the company said it saw “timid signs of recovery,” with sales inching up by just under 5 percent, while in the U.S. — representing about 8 percent of total revenues — sales were up about 5 percent. In the Rest of the World, which includes China and represents some 22 percent of turnover, sales were essentially flat, at 46 million euros.

As in the previous period, the wholesale channel — which accounts for just over 70 percent of group turnover and where revenues increased by 7.6 percent, at constant exchange rates — outperformed retail (25 percent of revenues), where sales in directly operated stores slid by 7.3 percent. The company said that this was the result of “lower tourist flows across the main European cities.”

Overall, the company had 64 directly operated stores at the end of September, up from 61 in the year-earlier period, including five new stores in Asia.

Tassinari said the new Asian stores were all in China, where the company — through its local partner — already operates 50 franchised stores. While some other brands are paring back their exposure to China, Tassinari said Moschino, which represents more than 60 percent of Aeffe sales, continued to perform strongly in that market and that the brand would see further retail expansion there, part of a process that will also see a repositioning of the brand itself with some stores closed by the local partner while others will be opened with a new look. He said the Chinese market helped to compensate for decreasing sales in Japan, a “difficult market where the consumer market is in recession,” and said he expects Aeffe sales in China to end 2016 up 11 to 12 percent. For 2017, he said he expects a further five to 10 store openings in the country, mostly Moschino-branded.

Although Aeffe has a strong retail sales presence in Italy, Tassinari explained that 70 percent of its wholesale activity takes place outside Italy. “If we were only wholesale, Italy would weigh some 15 percent less in terms of total revenues,” he explained. He also reminded that in retail, most customers are non-European and nonresident. But while the retail channel was hit by a drop in tourist flows, Tassinari said he saw signs the situation was improving: “Analyzing the September-October data, tourist flows are picking up,” he said.

Despite the difficulties in the retail channel, Tassinari said he would like to expand the company’s percentage of revenues from retail, to 35 percent. “But it has to be selective, with locations that are in line with the positioning of our brands and that, after a couple of years of startup phase, become profitable.”

In terms of product categories, shoes and accessories continued to suffer slight declines while royalty income (including, for example, from licensing the Moschino brand for glasses, perfumes and kids’ wear) increased by 20 percent on the year earlier period, although it still represents only 3.4 percent of total turnover.

Tassinari explained that the decline in accessories was not of concern, for it was due to the fact by end-September the company had shipped less than in the corresponding period of 2015. “Accessories are growing well, especially Moschino. Four years ago shoes and bags represented less than 15 percent of our sales, today they are 40 percent,” Tassinari said. He added that all product lines are performing well, with Philosophy by Lorenzo Serafini growing by 25 to 30 percent a season.

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