MILAN — With the women’s fashion shows due to begin here this week, most — if not all — attention will be focused on the runways, the designers and the glitter. But the business side is equally — if not more — important, and research presented in the Italian fashion capital Monday by Mediobanca shows just how much a driver of the Italian economy apparel and accessories are.
During a press conference at the foreign press club, Mediobanca head of research Gabriele Barbaresco helped shed light on just what “Made in Italy” really means, aside from the big names that everybody knows. Using figures from national statistics agency ISTAT, Mediobanca calculates that there are some 73,060 companies involved in fashion manufacturing that together generate revenues of 90 billion euros, or $116.1 billion, and offer full-time employment to some 380,000 people. Including distribution (wholesaling and retailing) the total number of firms in the industry reaches 280,000, generating 164 billion euros, or $211.6 billion, in revenues and employing almost 590,000. Figures are from 2012, the latest available full year.
Dollar amounts have been converted at average exchange rates for the periods to which they refer.
About 50 percent of total Italian fashion industry revenues in 2013 were generated by the top 135 companies — 120 fashion manufacturers and 15 distributors — operating in Italy with annual sales of at least 100 million euros, or $133 million.
The research, an annual exercise that in this year’s edition examines data from 2009 to 2013, helps get a broader view of the industry in general. For example, sales at the 135-company sample reached 55.2 billion euros, or $73.4 billion, in 2013, up 32.4 percent from 41.7 billion euros, or $58.4 billion, in 2009; they were up 1.4 percent on 2012, compared with overall Italian manufacturing revenues, which dropped 1.9 percent. Meanwhile, 2013 sales at the top brands, which include names like Giorgio Armani, Ferragamo, OTB and Ermenegildo Zegna, grew 4.4 percent on 2012, Mediobanca calculates.
Over the five-year period examined, Prada was the firm whose sales grew most, jumping 130 percent, compared with the 120-company sample average of 32 percent. Prada again led the pack in terms of profitability, with earnings before interest and taxes, or EBIT, in the five-year period coming in at 26.3 percent of sales. Following Prada were Tod’s, 20 percent; Armani, 18.6 percent, and Ferragamo, 17.7 percent. Overall, the top 120 fashion manufacturers managed an EBIT margin of 9.1 percent in the period, with leather goods (14.4 percent) and eyewear (12.9 percent) the best-performing categories.
Investors might be interested in knowing that in 2009-2013, Tod’s and Ferragamo had the highest dividend payouts, at 75 percent and 57 percent of net profits, respectively. Overall, the top fashion companies paid out some 1.9 billion euros, or $2.6 billion, in dividends in the period on 4.2 billion euros, or $5.7 billion, of total net profits, equivalent to a 46 percent payout ratio.
In terms of categories, sales grew most in jewelry, up 82 percent over the five-year period, followed by leather goods, 62 percent, and eyewear, 33 percent. Apparel, 20 percent, and textiles, 19 percent, underperformed the 120-company sample average in the period.
Of the 135-company sample, the Top 10’s aggregate sales for 2013 reached 14.4 billion euros, or $19.2 billion, about 26 percent of the sample’s total. Leading the pack were Kering — its Gucci and Bottega Veneta brands had combined revenues of 4.6 billion euros, or $6.1 billion — followed by Prada, 3.6 billion euros, or $4.8 billion, and Armani, 2.2 billion euros, or $2.9 billion. Benetton, OTB, Max Mara, Zegna, Ferragamo, Tod’s and D&G round out Mediobanca’s Top 10 list.
Italy’s fashion sector remains a powerhouse of the country’s overall manufacturing base. Barbaresco said it represents almost 18 percent of the total Italian manufacturing and generates about 11 percent of total Italian manufacturing revenues while employing some 15 percent of total manufacturing labor. It is a true exporting behemoth, representing about a quarter of total Italian manufacturing exports.
Top brands are also leading exporters. In 2013, exports represented 92 percent of Zegna’s total sales, followed by 90 percent at Ferragamo, 88 percent at OTB, 85 percent at Valentino and Prada, and 79 percent at Armani and D&G.
“This exporting success is peculiarly Italian,” Barbaresco said, pointing out that Italy’s fashion trade balance is constantly positive and has remained so even during the tough years of the crisis. Citing World Trade Organization figures, Barbaresco said that since 2009, the trade balance in Italian apparel has climbed from just under 5 billion euros, or $7 billion, in 2009 to just over 8 billion euros, or $10.6 billion, in 2013. The trade balance in textiles — an industry that faces constant pricing pressures from competitors in lower cost countries — has managed to remain stable and positive at roughly 5 billion euros, or roughly $6.6 billion, per year.
The figures for other European fashion powerhouses France and Spain, over the same period, are far less flattering, with both countries’ trade balances negative in both textiles and apparel exports. In France, net textile exports over the period have been negative at more than 11 billion euros, or $15 billion, a year in 2009-2013.
Taking a look at the makeup of the industry, Barbaresco also shed light on the importance of women in Italian fashion: They represent some 56 percent of the total workforce on the manufacturing side — with a peak of nearly 73 percent in apparel production — compared with 28 percent of the total Italian manufacturing workforce. They also dominate on the retailing side, representing a little more than 70 percent of total fashion distribution workers, compared with just under 50 percent of the total Italian retailing workforce in general.
Another aspect of the industry, which Mediobanca’s research shed light on, is just how important size is. Drilling down industry figures, the 120-company fashion manufacturing sample accounted for 55 percent of total sector revenues in Italy, or some 50 billion euros ($66.5 billion) in 2013. The same is true of exports, with total exports of the top 120 manufacturers reaching some 57 billion euros ($76 billion) in 2013, just over 55 percent of the entire industry’s total. In the case of eyewear, the value of exports in 2013 reached over 74 percent, the highest of all the fashion categories.
Looking ahead, the outlook remains fairly positive, Barbaresco said. Citing consensus analyst figures, he said that in 2014 Italy’s fashion industry overall should have notched up 2 to 3 percent revenue increases (not all full-year figures were in as the research was carried out) and 2015 should be “essentially stable.”