IT HOLDING CONFIRMS ACQUISITION OF FERRE
Byline: Luisa Zargani
MILAN — IT Holding, parent firm of Ittierre and Romeo Gigli, announced plans for a $174.1 million Eurobond as it reported lower earnings on sharply higher sales in 2001.
Net income fell 81.1 percent from its 2000 level to $870,000 as sales rose 21.7 percent to $458.4 million. IT attributed the profit decline to extraordinary costs caused by restructuring and its heavy investment in retailing. All dollar figures are converted from the euro at current exchange.
“The results for 2001 confirm the validity of our expansion strategy and the ability to quickly develop new market segments,” said Tonino Perna, president of IT Holding. “The costs of this expansion and the restructuring charges necessarily weighed on the margins.”
Perna also said the increase in sales was significant because it came after years of acquisitions: “Last year was not easy for the luxury goods sector, and it was the first acquisitionless year for us.”
Perna projected 2002 sales of $609.3 million, about 33 percent higher than last year’s.
Both earnings and sales finished last year with double-digit increases at two other Italian firms reporting their results last Friday, Gruppo Tod’s SpA and Mariella Burani Fashion Group.
IT’s board last week also confirmed the acquisition of Gianfranco Ferre SpA for $140.7 million. Ferre was originally purchased by IT’s GTP Gruppo Tonino Perna unit in December 2000, and will be fully integrated into IT’s corporate structure by June 30. Its consolidation into IT will generate amortization costs of $7.1 million that will be included in corporate results for the current year.
IT described the Ferre acquisition as “the most significant step” for a company that, between 1999 and 2001, made a series of purchases as it sought to increase sales through its own label and diversify its offerings within the luxury goods sector. Its stable of brands and divisions also includes Malo, Exte, Gentry Portofino, Allison and ITF. Last month, the Ittierre unit renewed its license for Versace’s Versus, Versace Jeans Couture and Versace Jeans Signature labels through the fall-winter 2007-2008 season.
Commenting on the addition of Ferre, Perna said in a statement: “IT Holding has now developed the financial and industrial conditions to integrate the designer’s maison, creating value for its shareholders.” He added that IT plans to increase the range of products, through the group’s production facilities, and to more tightly control distribution in multibrand boutiques and its own stores.
Last year, Gianfranco Ferre SpA registered sales of $44.3 million, 6 percent higher than in 2000. Net sales accounted for 60.2 percent of total sales, with the remainder, or $17.5 million, derived from royalties on licensed wholesale volume of $174.1 million.
IT’s three-year, $174.1 million bond, to be negotiated by the Luxembourg stock market, will be through Efibanca SpA and Unicredit Banca Mobiliare SpA, and is part of a financial restructuring that includes a capital increase of $95.7 million.
“With these operations, IT Holding will strengthen the property structure, extend the debt and diversify the financial sources,” said Massimo Brunelli, director of the group.
In 2001, IT Holding had earnings before interest, taxes, depreciation and amortization of $42.7 million, a 12.4 percent increase compared with the previous year, or 9.3 percent of consolidated sales.
Italy accounted for 40 percent of sales, the rest of Europe for 36 percent, the U.S. for 13 percent and the rest of the world for 11 percent, similar to the mix in 2000.
Eyewear generated sales of $39.2 million in 2001, 61.8 percent higher than in 2000 and 8 percent of sales, up from 6.1 percent in 2000. The group said young lines by Ferre also significantly contributed to the increase in sales.
“We are looking to the future with optimism,” said Perna. “Already in 2002, the investments of the past few years will bring the first significant results in terms of sales growth.”
Gruppo Tod’s SpA
After reporting 2001 earnings that very nearly doubled those of the prior year, Gruppo Tod’s SpA chief executive officer Diego Della Valle certainly didn’t spend Easter agonizing over profit warnings.
The Italian luxury goods group, which owns Tod’s, Hogan and Fay, reported Friday that net income for 2001 was $32 million, up 96.6 percent from 2000, while sales bounded 26.6 percent to $277 million.
The results benefited from a tax break on the firm’s capital increase, but also from a reorganization of operations that streamlined the company’s infrastructure, made production more efficient and whittled down costs.
Operating profits leaped 31.5 percent to $70 million. Dollar figures are converted from the euro at the current exchange rate.
Diego Della Valle, chairman and general manager, told WWD: “Last year was highly positive for the group both in terms of sales and profitability. The results achieved confirm the validity of the strategies that we are implementing. I believe that our group has scored some of the best results in the luxury goods market.”
Despite continuing financial challenges and the group’s ambitious three-year plan to invest in directly operated stores, Della Valle painted a rosy picture for the months ahead. “If we’re to look at our group in two years, the numbers will give the impression of a growth due to acquisitions even if that won’t be the case,” he said. “Instead, to keep up the quality level, we’re buying small production units, which may not make headlines, but will help turn our group into a jewel of the luxury goods market.”
Before and since going public in November 2000, Tod’s has sat out the mergers-and-acquisitions binge of many in the luxury goods market. Della Valle doesn’t see that changing, as future plans are to strengthen the Tod’s presence in Japan and other Asian markets and further diversify production.
Tod’s directors approved a proposal to hike the annual dividend per share to 30 cents from 11 cents, effective with the payment of May 23.
Mariella Burani Fashion Group
Selective acquisitions, and a streamlined structure to house them, helped produce robust double-digit sales and earnings increases for Mariella Burani Fashion Group in 2001.
Net income mushroomed 75 percent to $5 million as sales ballooned 41 percent to $193 million. Gross profits soared 81 percent to $19.8 million. Dollar figures are converted from the euro at current exchange.
“We want a vertical structure for our group similar to the big luxury firms so as to have total control,” said Giuseppe Gullo, Burani’s chief financial officer.
In the last couple of months, Burani Group added Revedi, an Italian outlet chain, and ITM, a Como-based silk mill, to a constellation of brands that includes its in-house line Mariella Burani, Mila Schon, Sahza and Stephen Fairchild, plus six accessories companies — Braccialini, Deimutti, Mafra, Cerruti, Mandelli and Baldinini.