GFT NET, FILA SET BACK HDP
Byline: Samantha Conti
MILAN — Losses at its fashion divisions dented earnings at Italy’s Holding di Partecipazioni Industriali.
HdP’s 2000 earnings dropped 21 percent to $35 million as losses of nearly $90 million in its two fashion units — $25.5 million at GFT Net and $63 million at Fila — and $17.7 million in other losses and charges depleted profit progress at its publishing division and at the HdP division, which oversees group activity.
The publishing unit, Rizzoli Corriere della Sera, contributed $84.8 million in profits and the HdP division generated $56.4 million in earnings, part of which came from extraordinary gains.
All dollar figures are translated at current exchange rates.
HdP said in a statement last week that, driven by strong gains at RCS and Fila, overall revenues rose 6.4 percent to $2.95 billion. Sales at RCS rose 13.5 percent to $1.55 billion due to the growth in advertising revenues and book publishing. Fila saw sales rise 10.5 percent to $860 million due to growth in all geographic regions with the exception of Europe.
At the fashion division, known as GFT Net, sales dropped 14.1 percent to $550 million as profitability suffered from “a radical reorganization” and the loss of licensing revenue, the company said. GFT Net controls Valentino and Joseph Abboud and makes men’s clothing under license for Calvin Klein, as well as other brands.
Last May, Giorgio Armani ended his long-standing license with GFT for the production of the Le Collezioni men’s wear line following the conclusion of spring 2000. That line, which is now produced in-house and known as Armani Collezioni, was believed to have generated some 40 percent of GFT’s sales.
Valentino, which has become a wholly owned division of GFT Net rather than a separate division of HdP, saw sales skyrocket 50 percent to $104.4 million due, the company said, to the direct distribution of the apparel lines, a 38 percent rise in Valentino boutique sales, and the launch of the accessories line last year.
The improvements at Valentino helped GFT Net to cut its losses 72.6 percent when compared to 1999 levels. HdP didn’t specify losses at Valentino, but they were estimated by sources to be $18.5 million last year, down from $22.2 million in 1999.
The $63 million loss at Fila fell in line with earlier pronouncements by HdP that the unit would report larger-than-expected losses. HdP said this was due to a combination of outlet closures in the U.S., interest rate increases, and unfavorable dollar-euro exchange rates.
HdP’s managing director Maurizio Romiti last month told an Italian newspaper that HdP would be focusing chiefly on its more lucrative publishing and editorial businesses over the next three years. As reported, sources also say Romiti is trying to sell GFT Net. He is said to be in negotiations with Gucci Group, although he has denied that discussions are taking place. Gucci Group has declined to comment on the reported talks.