May 16, 2014
Armani to step up investment in drive for continued sales growth
May 16, 2014
MILAN, Italy - Italian fashion group Giorgio Armani plans to step up investment in its brands and store openings, the company said on Friday after reporting a 4.5 percent rise in annual sales.
The company owned by its eponymous founder spent 100 million euros ($137 million) on store development and other projects last year and said it achieved growth for all brands - from couture label Armani Prive to AJ Armani Jeans - and in all markets.
Though sales growth slowed from 16 percent in the previous year, the 2013 result was against the backdrop of a sector-wide deceleration as demand cooled in China and some parts of Europe struggled to pull out of recession.
Armani outpaced larger Italian rival Gucci at constant exchange rates, posting 8.3 percent growth against Gucci's 2.2 percent, though it lagged behind Prada's 13.3 percent.
European operations performed well overall, with Britain and France leading the way, Armani said, helping the group lift full-year revenue to a record 2.19 billion euros, against 2.09 billion euros in 2012.
The company also said it had bought the remaining 50 percent of fast-fashion line A/X Armani Exchange to take full ownership and total control over the brand and how it fits into the group's portfolio.
"The success of a brand lies in its ability to unite creativity and sales," Giorgio Armani, the hands-on designer and group president who founded the company in 1975, said in a statement.
Operating profit (EBIT) rose 18 percent to 401 million euros and the company had available cash of 700 million euros at the end of the year. The 100 million euros it invested in 2013 also included measures to improve supply chain efficiency.
"The strong profitability and liquidity that we have available also allows us to accelerate our investments for future development," said Armani, who turns 80 this year.
In an interview with Italian daily Il Sole 24 Ore, Armani said he would concentrate on strengthening the retail network in key global markets at the same rate as last year, during which it opened more than 100 standalone stores.
He also said the company was particularly pleased with its products for men and the sporty EA7 line and was concentrating more on accessories, which typically generate higher margins for fashion companies than clothes or shoes, partly because they do not have to be made in a wide range of sizes.
The question of who will succeed the creative director and chief executive of one of the world's most recognisable fashion brands has occupied industry observers for a decade.
Armani told Il Sole that he had no intention of leaving his role, but was cultivating his team to ensure continuity in the business.
"I still have lots of energy and my plans for the future are as much focused on the creativity of the collections as they are on our global strategy," he told the paper.
The designer known in Italy as King George has hinted over the years that he could list or sell the group and said earlier this year that he was considering creating a foundation to protect the future of his fashion empire.
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