GIORGIO ARMANI SALES GAIN 20% LAST YEAR
Byline: Samantha Conti
MILAN — A lackluster holiday season in the U.S. couldn’t keep Giorgio Armani SpA from boosting 2000 sales 20 percent, to nearly $1 billion, and uncertainty about current conditions isn’t expected to keep this year’s increases below 25 percent.
Confirming reports in these columns, Armani also announced a joint venture with longtime licensee Vestimenta to produce the men’s and women’s Borgonuovo line.
“We have seen very significant growth in all of our businesses,” Armani said in a statement. “I believe that our vision of a diversified, independent fashion group, which is in control of all aspects of its own manufacturing, distribution and retail, is proving to be a winning strategy.”
He added that the company’s focus on retail expansion and the launches of cosmetics and home collections were among the major contributors to last year’s growth. Fittingly, the company also said it would acquire control of three out of four of its Hong Kong retail stores — one Giorgio Armani boutique and two Emporio Armani stores — that are currently operated by Joyce Boutique Holdings Ltd. The third store, an Emporio Armani, will reopen at an enlarged location later in the year. The company has also opened Giorgio Armani Hong Kong to oversee distribution and retail operations in Asia. Consolidated net revenues — not including the sales of licensed products such as fragrances, eyewear and watches — reached $970 million last year; in 2001 that figure is expected to jump to $1.22 billion. All dollar figures are converted at current exchange rates.
An Armani spokesman said the disappointing U.S. holiday sales had little impact on Armani’s business. “While there is no question that sales in America were less buoyant this Christmas compared with last year, we really did not feel the effects of a downturn in demand. I think that was felt more at the mid-market level,” he told a small gathering of journalists at the Armani headquarters here.
The spokesman added that the U.S. market was expected to make up 36 percent of total sales in 2001.
Although fully audited results won’t be released until May, net profits, the spokesman said, also increased 20 percent last year. “The focus on owning our manufacturing and our stores has allowed us to increase and improve our margins considerably,” the spokesman said.
The joint venture with Vestimenta now means that all of Armani’s apparel lines will be produced in-house. Giorgio Armani SpA said it signed a letter of intent with Vestimenta for the formation of a new company, 60 percent of which will be owned by the designer and 40 percent by the manufacturer.
Vestimenta has been producing the Borgonuovo lines since 1979 and, as part of the agreement, will sell the three factories that made the Armani collections to the new joint-venture company. The new company, which will begin operating April 1, will employ about 400 people. It will be run by a board of directors and the chief executive will be Massimo Mosterts, the owner of Vestimenta.
Armani said the agreement with Vestimenta would allow his company to have direct control over “unique manufacturing and distribution expertise that will be important to our continuing success in today’s competitive international marketplace.”
The Vestimenta deal comes on the heels of a similar agreement with the men’s clothing manufacturer and retailer Ermenegildo Zegna. After buying factories last year from GFT, its former licensee, Armani set up a joint venture with Zegna to produce and distribute the men’s division of Armani Collezioni, formerly Le Collezioni. The spokesman said the renaming of the collection — and the single-brand stores — has had a positive impact on business.
The Armani spokesman said the company’s investments in 2000 were in line with last year’s $103.5 million, and that the company’s net financial position was “at a high level of liquidity, which will continue to facilitate the group’s expansion program.” In 1999, the company’s net financial position was a hefty $14.3 million.
Meanwhile, later this year, the company plans to open freestanding Armani Casa stores in New York, Los Angeles, London, Paris, Tokyo and Athens. On April 15, it will open a 3,780-square-foot shop-in-shop on the second floor of Harrod’s in London. The company plans to release 2001 first-quarter results in April, with final figures for last year available in May.