HDP LOSES $46.7M IN FIRST 6 MONTHS
Byline: Samantha Conti
MILAN — Restructuring of the Italian operations of GFT weighed heavily on the bottom line of its parent Holding di Partecipazioni Industriali (HdP) which reported a loss of $46.7 million in the first six months of the year, compared with a profit of $1.2 million last year.
A large part of the red ink flowing around HdP, in the six months ended June 30, came from the one-time costs linked to the reorganization of GFT.
Dollar figures are translated from the Italian lira at current exchange.
Revenues at HdP dropped 3.9 percent to $1.56 billion, while operating results moved back into the black, climbing to an operating profit of $4 million from an operating loss of $49.2 million in the corresponding period last year.
Including restructuring charges, however, Turin-based GFT reported a loss of $55.9 million, including the restructuring charges, compared with a loss of $7.3 million last year. Revenues slid to $343.3 million, 7.8 percent lower than last year. The firm posted an operating profit of $5.2 million, however, compared with a loss of $7 million lire last year.
The statement said the drop in revenues came mostly from the U.S. market, where sales of the Emanuel/Emanuel Ungaro bridge line decreased considerably, and from the sale of a men’s wear division in the U.S., a unit that the company no longer considered strategic.
As reported, Ferragamo, which controls the Ungaro fashion house, this month assigned the Emanuel license to a new company formed by Kimberly Perrone and Maura de Visscher, two executives who formerly ran the Emanuel business at GFT.
GFT’s rise in operating profit was attributed to higher sales margins.
Under the reorganization plan, GFT in Italy will cease to exist in its current form and will be turned into a series of separate business units that will serve each of the clothing lines that HdP owns and/or manufactures. Each business unit will oversee its production, administration and logistics.
GFT in Italy currently produces collections for Giorgio Armani, Calvin Klein, Valentino and Antonio Fusco, and two in-house lines known as Sahza and Facis.
As reported, HdP wants to create a luxury goods group and plans to make acquisitions in the sector. Over the past week, rumors have surfaced once again that HdP plans to buy the German fashion house Escada, although spokesmen for both companies on Monday denied the reports. Industry sources say a deal between the two could be sealed by the end of the year.
HdP said the termination of Armani’s Le Collezioni women’s license, coupled with the termination of the Emanuel license, meant that the company had to retool the structure and aims of what was once Italy’s most prestigious clothing manufacturer.
Meanwhile, sales at Valentino, the first and only fashion house in HdP’s stable, acquired in January 1998, rose 10 percent in the half to $36.8 million, while the operating loss was $7.4 million and net loss was $11.7 million. Those losses reflect the fact that HdP has charged back the cost of the acquisition of Valentino to the fashion house, considering the acquisition a leveraged buyout. Comparable bottom-line figures from a year ago were not given, because of the company’s restructuring.
Fila’s first-half revenues dropped 14.5 percent to $445.5 million. Operating loss improved: The company reported a loss of $19.6 million compared with $46 million last year, due to an improvement in gross margins. The net loss also decreased to $37.4 million from $64.6 million.
HdP’s publishing division Rizzoli Corriere della Sera (RCS) reported the best results within the company. Revenues grew 5.4 percent to $755.3 million while operating results jumped 21.3 percent to $38.7 million. Net profit, though, dropped to $17.9 million from $28.5 million last year.
The company said that in the corresponding period last year RCS’s bottom line had benefited from one-time profits from the sale of a 10 percent stake in the company to Hubert Burda Media. This year, extraordinary expenses of $3.4 million weighed on the company’s bottom line.