MILAN — “We are optimistic, otherwise we would have to change jobs,” said Marcello Tassinari, managing director and chief financial officer of Aeffe SpA, discussing the coronavirus emergency while commenting on the release of year-end figures for the Italian fashion group.
“We remember 2019 with great nostalgia, even though the comparison with 2018 was challenging, because 2018 was the best year in history for Aeffe,” continued Tassinari in a phone interview. “The first half of 2019 was good, but things slowed down in the second half. That said, 2019 was a good year.”
In the 12 months ended Dec. 31, Aeffe — which controls the Alberta Ferretti, Moschino, Philosophy di Lorenzo Serafini and Pollini brands — saw a drop in profit on a gain in sales, but Tassinari said earnings were impacted by ongoing investments in research and development. The COVID-19 crisis is causing Aeffe to contain costs going forward, and review events and promotion, “while protecting our brand awareness so we will be ready when things will restart.”
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To wit, asked about the upcoming Alberta Ferretti 2021 resort show scheduled for May 22 in Rimini, near Aeffe’s headquarters, Tassinari said it has been canceled — in line with other fashion events from brands including Giorgio Armani, Gucci, Max Mara, Prada and Versace.
Last year, Aeffe’s net profit decreased 26.3 percent to 12.3 million euros, compared with 16.7 million euros in 2018. Earnings before interest, taxes, depreciation and amortization were down 15.6 percent to 36.6 million euros, with an incidence of 10.4 percent of consolidated sales, in line with expectations and dented by the ready-to-wear division, said Tassinari. Operating profit was down 20.2 percent to 23.6 million euros.
Even though it was aware margins would be impacted, the company last year continued to invest, strengthening its research and development and production and marketing divisions, as well as its expansion online, the executive said.
Revenues rose 1.4 percent to 351.4 million euros, compared with 346.6 million euros in 2018.
Sales of the rtw division were down 1.3 percent to 262.2 million euros, while revenues of the footwear and leather goods division climbed 8.3 percent to 128.2 million euros. Tassinari underscored how accessories remain a strong category with customers. In the case of Moschino, accessories now represent 40 percent of sales.
Executive chairman Massimo Ferretti said that “given the highly uncertain macroeconomic scenario, we positively evaluate 2019 results, supported by the good performance of the directly operated stores network and of the e-commerce channel, together with the good progression of accessories, confirming the effectiveness of the investments and strategies implemented by the group.”
Ferretti, who is the brother of designer Alberta Ferretti, said that “in recent weeks, the international scenario suddenly weakened, as a result of the spread of coronavirus, and today the duration of this epidemic is still uncertain. Our group is committing all of its resources and energies to face these difficult market conditions, both in terms of careful management of customer relations and of considered actions aimed at containing costs that can be postponed without any prejudice to the development and strengthening of our brands.”
“We are working serenely to protect our employees without interrupting business and supporting our partners, planning our next sales campaign,” said Tassinari. To minimize the risks of contagion, employees are working and taking vacations in shifts. Aeffe has also endorsed smart working.
In compliance with the Italian government’s lockdown and decree to close nonessential stores, the group’s boutiques closed today, while the shops in Paris, London and the U.S. are still open for the time being.
In 2019, sales in Italy were down 4.5 percent to 160.9 million euros, dented by the weakness of the wholesale channel, in contrast with the positive performance of retail. Italy represented 45.8 percent of revenues. That incidence decreased to 36 percent net of the effect of sales to tourists in Italy.
Revenues in Europe grew 8.2 percent to 86.9 million euros, accounting for 24.7 percent of the total, driven especially by a good performance in the U.K., Germany and Eastern Europe.
In Asia and in the Rest of the World, sales rose 7.4 percent to 86 million euros, representing 24.5 percent of the total, especially driven by a good trend in China and South Korea, which posted growth of 7.2 and 14.6 percent, respectively.
Sales in America inched down 0.5 percent to 17.6 million euros, contributing to 5 percent of the total. At constant exchange rates, revenues in the region were down 4.5 percent. Tassinari said the performance was dented by the wholesale channel. Online sales in the region were solid and he said “50 percent of sales derived from e-commerce in America.”
Revenues in the wholesale channel dropped 1.6 percent to 244 million euros, accounting for 69.4 percent of the total, impacted by a downturn reported by the fall 2019 collections.
Sales at directly operated stores rose 7.7 percent to 93.8 million euros, accounting for 26.7 percent of the total.
Royalties were up 17.7 percent to 13.7 million euros, representing 3.9 percent of the total.
The number of directly operated stores declined by three, as per the strategic focus on the existing retail network. During 2019 some franchised stores were closed, mostly concentrated on the Asian market and in the last quarter of the year, following both to the strategic repositioning of the stores and the growing macroeconomic
uncertainty.
As reported, the contract for the production and distribution of Cédric Charlier collections, first signed in 2012, was not renewed, and Tassinari said that, while Aeffe “likes to cultivate new talents, the licenses must be profitable. We will continue to work with licenses but the macroeconomic context has changed.” Aeffe also produces and distributes collections for Moschino’s creative director Jeremy Scott’s namesake brand.
“The current international macroeconomic framework remains very complicated and the economic and social consequences of the COVID-19 coronavirus epidemic are currently not quantifiable,” said the company on Thursday. “Aeffe has already implemented measures to address the situation by limiting any negative effects, through a
particularly careful customer relations management and through adoption of considered measures aimed at postponing costs without any prejudice for the strengthening and support of its brand.