Moschino’s Strength in China Helps Limit Aeffe’s 2020 Sales Decline

MILAN — The COVID-19 pandemic affected Aeffe SpA’s revenues last year, but the group implemented a number of initiatives to limit the impact of the health emergency — and banked on the strength of the Moschino brand in China.

Preliminary 2020 revenues declined 23.4 percent to 269.1 million euros, compared with 351.4 million euros last year.

The Italian group, listed on the STAR segment of the Italian Bourse, controls the Alberta Ferretti, Philosophy di Lorenzo Serafini, Moschino and Pollini brands.

In the 12 months ended Dec. 31, revenues of the ready-to-wear division amounted to 197.4 million euros, down 24.7 percent. Sales of the footwear and leather goods division decreased by 16.2 percent to 107.4 million euros.

“Although the fashion and luxury sectors have been among the most affected by the pandemic, we believe that 2020 revenues show a good resilience of our brands compared to the reference market,” said Massimo Ferretti, executive chairman of Aeffe. “In particular, we are satisfied with the strategies adopted in the areas of digital marketing and omnichannel distribution, with excellent results from our online channels, which partially offset the losses resulting from restrictions and closures on a global scale. In addition, at a management level, our management team has developed initiatives aimed at effective control of working capital, with benefits in terms of indebtedness improvement. Looking to the coming months, we see signs of recovery in various markets, especially in Greater China where we are strengthening our commercial organization with a new domestic travel retail project.”

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Asked to elaborate, managing director Marcello Tassinari said in an interview that the company has been studying the movements of local Chinese customers. “They are necessarily traveling much less outside of China, due to the pandemic, but the Chinese economy is growing. The duty-free business is growing locally, in airports and in places such as Sanya [on the island of Hainan].” In fact, Aeffe has opened a Moschino duty-free shop in Sanya with its local partner and is planning an additional one in the same city over the next few weeks. “By the end of 2021, we will open three more Moschino duty-free stores in China,” Tassinari said.

The executive said Moschino has “great strength” in China and has been showing “strong resilience, also during the lockdown.”

Aeffe’s business in China is wholesale and after the lockdown, “it immediately picked up,” noted Tassinari.

Aeffe said the company saw a recovery in all geographic areas in the second half of last year.

In 2020, sales in Italy were down 24.2 percent to 121.9 million euros compared to 2019, as the pandemic impacted both its retail and wholesale channels. Revenues in Europe decreased 4.9 percent to 82.6 million euros, contributing to 30.7 percent of the total. Business was driven by a positive performance in Germany and Eastern Europe.

In Asia and in the Rest of the World, sales amounted to 53.5 million euros, representing 19.9 percent of the total. They fell 37.8 percent compared to 2019. The Far East area has been severely impacted by the restrictions imposed to limit the virus, while the Middle East has experienced a less significant decline, Tassinari said. The Greater China area reported a 35 percent decrease in 2020, recovering in the last quarter of the year, with a clear uptick in store traffic.

Sales in America decreased 37.3 percent to 11 million euros, contributing to 4.1 percent of the total. Tassinari attributed the fall to a wholesale business mainly with department stores, which were the “bottleneck” last year. On the flip side, he explained that online business in the U.S. is thriving, but that it is classified under the Italian region because it is developed through an Italian platform.

Globally, Tassinari said the online channel posted strong double-digit growth.

While admitting the uncertain environment is affecting business, he sees “strong affection for our brands,” and said he was “cautiously optimistic” about 2021.

Last year, all distribution channels were affected by the COVID-19 pandemic. The wholesale channel declined by 20 percent to 195.1 million euros, contributing to 72.5 percent of consolidated sales.

Retail sales fell 32.3 percent to 63.5 million euros. In particular, in the last quarter, revenues recorded a 39.4 percent decrease following the restrictions implemented in Europe to curb the spread of the coronavirus.

Royalties declined 23.5 percent to 10.4 million euros, representing 3.9 percent of consolidated sales,

Tassinari highlighted how, despite the difficult macroeconomic situation, Aeffe’s efficient working capital management allowed the company to contain its debt. “The careful monitoring of trade receivables and inventories limited the growth in financial debt, resulting mainly from the capital expenditure of 6 million euros invested during the year,” he said. “Our mission has been to help our clients by extending their payments, preserving our team [of partners] and succeeding in maintaining the supply chain and the know-how of small laboratories.”

As of Dec. 31, net debt including the IFRS 16 effect stood at 141 million euros, compared with 148.7 million euros at the end of September last year.

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