China, U.S. Boost Giorgio Armani Sales in First Half

MILAN — Giorgio Armani is confident in the resilience of his namesake company, which is showing a business recovery in the first six months of 2021, following a 2020 that was impacted by the COVID-19 pandemic.

In particular, the U.S., China, and most recently Europe, are helping to boost the performance of the Italian fashion group, contributing to a 34 percent gain in sales in the first half of 2021. At constant exchange rates, sales grew 38 percent.

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Revenues in the directly operated retail channels, excluding wholesale and licenses, grew 59 percent in the first half of 2021 compared to the same period in 2020.

“The recovery of the first months of 2021, with results already close to 2019 despite the pandemic not yet resolved, together with the resilience shown by the Armani Group in facing the most difficult moment of the pandemic period in 2020, makes me particularly optimistic and determined to continue my medium-long term strategic path, characterized, as always, by a great attention to quality while remaining faithful to my aesthetic philosophy,” said the designer, who is also chairman and chief executive officer of the group.

The group expects “a much better profitability scenario for 2021,” in light of the sales trend, “barring a return to widespread retail closures in the second half of the year” due to the pandemic.

Last year, the decline was heavily concentrated in the first half, while the second half showed a clear recovery, despite the new waves of contagion and the intensification of the state of emergency in Europe that marked the last quarter of 2020.

In the 12 months ended Dec. 31, the group’s net profit fell 27.4 percent to 90 million euros, compared with 124 million euros in 2019, and consolidated sales amounted to 1.6 billion euros, a decrease of 25 percent compared with 2.16 billion euros in 2019.

Total revenues from Armani-branded products worldwide, including licensing revenues, in 2020 fell 21 percent to 3.3 billion euros from 4.15 billion euros in the previous year.

The goal, said Armani, is to return to pre-pandemic levels by 2022, with over 4 billion euros in revenues that include licenses and more than 2 billion euros in directly consolidated revenues.

Armani, who turned 87 on July 11, has been at the center of heightened speculation as rumors continue to swirl around a possible deal with Exor, the Agnelli family’s holding and the owner of Ferrari, which has recently invested in Hermès International’s China project Shang Xia, and in a minority stake in Christian Louboutin — rumors denied by both Armani and Exor.

Earlier this year, Armani signed a multiyear sponsorship of the Scuderia Ferrari racing team. Under the agreement, the fashion house is to supply formal attire and travel wear to the Ferrari team’s management, drivers and technicians to be worn at official events and during transfers linked to Formula One’s Grand Prix international races.

In 2020, the Armani group’s earnings before interest, taxes, depreciation and amortization amounted to 263 million euros, down 1.8 percent from 268 million euros in 2019.

The company reported an operating loss of 29 million euros, but the comparable figure last year was not revealed.

“The drop in revenues in 2020 should be read not only as a consequence of the pandemic and the traffic and consumption crisis, which is particularly penalizing for the clothing sector, but also in line with Giorgio Armani’s own strategic principle of ‘less is more’,” said Giuseppe Marsocci, deputy managing director and chief commercial officer of the group.

As reported, Armani has been vocal about choosing to limit the offer of new collections, responding to the current moment, aligning collections in stores to the seasons “reflecting the real needs of end customers. All of this by also abiding to the values of sustainability, which are more important today than ever,” concluded Marsocci, who was appointed to his role in 2019.

In an open letter sent to WWD in April last year, Armani wrote that “luxury cannot and must not be fast” and that the current emergency “shows that a careful and intelligent slowdown is the only way out, a road that will finally bring value back to our work and that will make final customers perceive its true importance and value.”

This decision followed a previous one taken in 2017 to streamline his portfolio of brands planning to focus on the Giorgio Armani, Emporio Armani and Armani Exchange labels, effective with the spring 2018 season. In this context, the Armani Collezioni and Armani Jeans brands have been integrated and merged into the Emporio Armani and Armani Exchange lines, respectively. The goal is to strengthen the individual brands and maximize their potential in an increasingly competitive and changing market.

Last year, net assets were stable at more than 2 billion euros, compared with 2.05 billion euros in 2019.

The group can rely on a cash pile of 925 million euros as of the end of Dec. 31, a 24 percent decrease compared to the end of 2019.

In particular, the balance of net cash and cash equivalents improved significantly in the first half of 2021, rising to a level of 1.08 billion euros at the end of June, ensuring the financial resources necessary for the group’s medium to long-term stability and growth.