In 2019, the Armani Group reported consolidated net earnings totalling EUR 124 million on net sales revenue of EUR 2,158 million. This result made it possible for the Group to achieve the goal of returning to revenue growth a year in advance of its plan, thanks primarily to the positive performance of comparable sales (+7% compared to the previous reporting period) in the directly managed store and e-commerce network, after a three-year period of planned overall turnover reduction as part of a strategy to streamline and upgrade the brand portfolio and distribution network, with a view to achieving medium/long-term results.
This strategy, announced in 2017, provided for an exclusive focus on the Giorgio Armani, Emporio Armani and A|X Armani Exchange brands. In this context, the classic diffusion lines – “Armani Collezioni” and “Armani Jeans” – were integrated and merged into the Emporio Armani and A|X Armani Exchange lines.
In 2019, brand revenues, including licences, amounted to EUR 4,157 million, an increase of 9% compared to the previous reporting period, highlighting better performance than forecast, following roll-out of the strategy.
With a view to supporting the next relaunch phase, the Armani Group has already implemented investments totalling EUR 105.5 million in 2019, in line with the 2018 level (EUR 105.7 million).
In 2019, the Armani Group, having significantly reduced and selected the wholesale distribution network from a qualitative standpoint, expanded the direct distribution network through the acquisition of points of sale in a number of Chinese provinces (mainly Guangdong and Sichuan), in Macao SAR and in Mexico. At the end of 2019, the number of directly managed stores totalled 598, an increase of around 70 compared to the end of 2018.
Assets and the net financial position remained stable. At the end of 2019, the Group’s net equity remained steady at EUR 2,050 million, in line with 2018, while net cash and cash equivalents stabilised at EUR 1,215 million (Euro 1,316 million at the end of 2018), as a result of greater investment in working capital represented by collection and store renewal projects and by the stock of goods offered in the Group’s broader network of directly managed stores.
With a view to medium- to long-term strategic upgrading, these actions in 2019 led to a decrease – albeit to a lesser extent than expected – in the EBT level (Earnings Before Tax), which totalled EUR 175 million, a decrease of approximately 12% compared to 2018 (EUR 200 million).
COVID-19 EMERGENCY, EMERGENCY MANAGEMENT AND OUTLOOK COMPARED TO THE STRATEGIC PLAN
From the onset of the health emergency caused by the COVID-19 pandemic, the Group implemented all measures deemed necessary for ensuring the safety of employees, customers and operators. Increasingly stringent precautionary measures were taken at its headquarters, Armani/Silos offices, and the Group’s stores, restaurants and hotels around the world.
In addition to emergency management, the Group immediately implemented more rational calendars for designing and shipping goods, and selling product in stores, aligning them with genuine seasonality and the real needs of end consumers – a decision consistent with the principle of reducing inefficiencies and waste, and in line with the now widespread demands for sustainability that are crossing all sectors.
The ongoing global health emergency has forced the national governments of European and non- European states to issue exceptional protective and restrictive measures, with consequent profoundly depressive effects on all economic sectors for which tourism-flows and propensity to buy are relevant, such as the textile and clothing sector, thus impacting the production and distribution system.
Although it is not yet possible to accurately estimate the ultimate economic impact of the COVID- 19 pandemic, the Group has both the resources and a solid capital and financial structure that will enable it to cope with uncertainties and ensure it continues resolutely in implementing its strategic plan – a plan based on quality and on the Armani brand identity, as well as on current and future corporate initiatives.
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