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Armani Scores 2.3 Percent Rise in 2008 Revenues

Godfrey Deeny
May 08th, 2009 @ 00:42 AM - Sydney

The house of Giorgio Armani has announced it scored a 2.3 percent in annual revenue in 2008, the latest sign that major league fashion and luxury houses are riding out the global down turn better than many had predicted.

The Milan-based fashion house wracked up consolidated revenue for 2008 of 1.620 billion euros, or $2.155 billion at current exchange rates. This compared with 1.596 billion euros, or $2.123 billion, in 2007, representing a 1.5 percent increase when exchange rate changes are taken into account.
However, Armani did suffer a 14.6 percent decline in net profit. Using a common calculation for profit – EBITDA, or earnings before interest, tax and depreciation – Armani posted profit of 303 million euros, or $402 million. The house was careful to stress that this still represented a hefty 18.7 percent margin on consolidated revenue, relatively high by current industry standards.
Conceding that 2008 had been, “a difficult year for the fashion and luxury market,” the designer was careful to insist that, “nevertheless, the good results achieved by the Armani Group bear witness once again to the strength of our brand and confirm the solidity of our successful business model.”
“We continue to believe in our vision, our goals and our strategic choices, and this belief encourages us to maintain a long term view in any initiative we undertake,” Armani added.
In another measure of the house’s financial buoyancy, Armani announced a net cash position of some 370 million euros, or $492 million, largely in line with 2007’s outcome.

Armani, arguably the contemporary fashion designer with the most recognizable name internationally, noted that it had continued its aggression expansion plans last year.
Armani undertook a “record level (of) capital investments of over 170 million (or $226 million) in 2008 compared to 95 million euros ($126 million) in the previous year,” the group trumpeted in its release.
Moreover, the Milan-based house noted that it “maintained the investment in its retail network expansion,” by opening a further 50 new stores, bringing the total worldwide to 539 stores. Armani also acquired interests of third parties, in particular increasing its stake in the joint venture Presidio, from 25 percent to 50 percent, which controls the A/X Armani Exchange brand.
“These results highlight the extremely solid financial position of the Armani Group, especially taking into account the high level of capital investments made in 2008,” the house argued in its release.
Breaking down sales on a geographic basis, the Italian fashion house revealed that revenues in North America were steady, while its Japanese market suffered a decline of 4 percent in turnover. Elsewhere, turnover soared by a whopping 30 percent in Greater China, while in Europe, excluding Italy, turnover advanced by 8 percent. In the rest of the world, revenues improved by 14 percent, and in Italy by 4 percent.

In terms of the designer’s various collections, the best performers were Armani Junior, with a 36 percent leap, A/X Armani Exchange with a 15 percent gain, Emporio Armani, up 13 percent, and Armani Jeans, garnering a 7 percent rise. The Giorgio Armani collection, however, winced with no change in turnover, while Armani Collezioni posted a 2 percent rise. The relatively modest performance of the house’s two priciest lines underlines a general trend among fashion consumers worldwide to continue to shop, but to spend at lower price points.

Revealingly, in terms of product category, apparel rose by 8 percent in 2008, while watches and jewelry, fragrances, cosmetics and skincare all showed no change. Moreover, eyewear, a category where Armani has historically been a market leader, suffered a 1O percent decline.

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