Aeffe's profits skyrocket by 200%
today Mar 13, 2018
The year 2017 was an extraordinary one for Aeffe. The Italian fashion group's revenue increased by 11.6% at constant exchange rates (+11.4% at current rates), reaching €312.6 million. EBITDA leapt by 45%, up to €36.6 million (equivalent to 11.7% of revenue) and net income more than trebled, reaching €11.5 million (+216% compared to the €3.6 million recorded in 2016). Good news also in terms of financial debt, which fell from €59.5 million as of 31st December 2016 to €50.6 million (-15%) as of the end of last year. The latest report by Italian financial analysts, dated 9th March, said the group exceeded expectations, and raised its target price to €3.3 per share, compared to €3.0 in the assessment of 7th February.
"In the 2017 financial year, [Aeffe] recorded double-digit revenue growth and an even greater increase in profitability, thanks to the positive performance of our brands, especially the directly owned ones, and to the effectiveness of our business model," said Aeffe S.p.A.'s Executive President Massimo Ferretti. "Given the group's energetic trend and the positive feed-back from the sales campaign of the Autumn/Winter 2018-19 collections, still ongoing, we are confident that 2018 too will be characterised by further growth and by a strengthening of our brands," added Ferretti.
Contrary to the experience of other Italian fashion groups, Aeffe performed strongly on the domestic market (which accounts for 48.7% of the group's revenue) growing 20.7% to €152.1 million. The rest of Europe (accounting for 21.7% of revenue) also posted a positive performance, growing 13.6% thanks chiefly to the UK, Germany and France. Russia, worth 2.9% of Aeffe's consolidated revenue, was stable compared to the previous financial year, after a strong recovery in the last quarter of 2017. Business in the USA (accounting for 6% of revenue) instead recorded a downturn, with revenue falling by 17.5% at constant exchange rates, chiefly due to a slow-down in department store sales. The rest of the world generated a revenue of €65 million for Aeffe, equivalent to 20.8% of the total and up 3.7% over 2016 at constant exchange rates. This was notably due to highly positive results in Greater China, where revenue grew 16.5%.
In terms of distribution channels, the year was successful all round: retail revenue (26.7% of the total) rose 18.9% at constant exchange rates; wholesale revenue (70.1% of the total) increased by 9%, and royalty income (3.2% of total revenue), grew 11.4% over 2016.
The outlook for Aeffe in 2018 is one of renewed growth. All the brands in the group's portfolio are expected to strengthen their position, from Alberta Ferretti to Philosophy by Lorenzo Serafini, Moschino, Pollini, Jeremy Scott and Cédric Charlier. Other growth factors will be the group's expansion in high-potential markets such as China and South-East Asia, and its focus on Millennial consumers. Key markets will also be reinforced via the expansion of Aeffe's franchised store network and a series of targeted openings of directly-owned monobrand stores.
The group is also working on a multi-year plan to broaden its accessories and leather goods collections, starting from proprietary brands Alberta Ferretti and Moschino, by leveraging the manufacturing capabilities of Pollini. Moschino is also planning several new licensing operations, especially in fragrance and eyewear, following the start of a collaboration with Italian eyewear group Safilo in January 2018.
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