Reorganization Dents Aeffe Top, Bottom Lines in First Half – WWD


MILAN — Aeffe’s reorganization is weighing on the company’s top and bottom lines, but executive chairman Massimo Ferretti is standing behind the soundness of the strategies put in place for the fashion group and remains confident in its future growth and development.

Ferretti said Friday in commenting on first-half results that Aeffe’s strategic repositioning will lead “in the short term to be much more competitive on the global market.”

 In the first six months of the year, Aeffe revenues decreased 7.7 percent to 162.9 million euros, compared with 176.5 million euros in the same period last year. Despite the drop, Ferretti said he was “satisfied with the results of the retail channel, a direct consequence of the transition to a direct distribution model for the Moschino brand on the Chinese market.”

As reported, in 2021 Aeffe took control of Moschino’s distribution in mainland China, signaling the increasing relevance of that market for the label. This involved around 20 stores, which had been operated for the previous 10 years by Scienward Fashion and Luxury (Shanghai) Co. Ltd.

In addition to Moschino, Aeffe comprises the Alberta Ferretti, Philosophy di Lorenzo Serafini and Pollini brands.

Massimo Ferretti

Massimo Ferretti

courtesy image

Ferretti cited a good performance of the three brands, while highlighting the celebratory fashion show for the 40th anniversary of Moschino to be staged in Milan during fashion week on Sept. 21 and that “will mark a further step in the brand’s repositioning and revamping project, boasting a significant development potential.”

The event is conceived to pay tribute to founder Franco Moschino. Stylists Carlyne Cerf de Dudzeele, Katie Grand, Gabriella Karefa-Johnson and Lucia Liu will spearhead this season’s collection, each creating 10 contemporary looks inspired by the works of the late designer.

Jeremy Scott

Jeremy Scott

Stéphane Feugère/WWD

Moschino has not yet revealed a successor to the latest creative director, Jeremy Scott, who exited the brand in March after 10 years.

Ferretti concluded by saying “we look forward to the second half of the year with constant attention toward the markets and our customers, but are confident of returning to satisfactory growth very soon.”

In the first six months of the year, Aeffe reported a net loss of 11.7 million euros compared with a net profit of 2.9 million euros in 2022.

Adjusted earnings before interest, taxes, depreciation and amortization, net of the extraordinary effects associated with the group’s organizational restructuring, was halved to 10.4 million euros compared with 20.9 million euros in 2022.

In the period, Aeffe registered an adjusted operating loss of 6 million euros, compared with 7 million euros last year.

Margins decreased as a result of Moschino’s strategic course and the costs connected to the change of distribution model in China from wholesale to retail, and the launch of the repositioning plan for the various Moschino collections, which also impacted turnover and royalties.

Revenues of the ready-to-wear division amounted to 108.8 million euros, down 9.5 percent, while sales of the footwear and leather goods division decreased 6.1 percent to 75.3 million euros.

Sales in Italy were down 4.4 percent to 68.2 million euros, representing 41.9 percent of the total. The company touted “excellent results” of the retail channel, which was up 8 percent compared to the first semester of 2022, while the wholesale channel recorded a contraction of 6 percent.

Sales in Europe decreased 15.3 percent to 50.2 million euros, accounting for 30.8 percent of the total, mainly dragged down by the U.K. in both the wholesale and retail channels.

In Asia and the Rest of the World area, revenues climbed 9 percent to 34.4 million euros, representing 21.1 percent of the total. The change of distribution in Greater China for the Moschino brand is gradually stabilizing with growing performance, said Aeffe.

Sales in America decreased 29.4 percent to 10.1 million euros, with an incidence on turnover of 6.2 percent, impacted by a general slowdown in the consumption of luxury goods.

In the first semester of 2023 Aeffe recorded consistent growth in the retail channel, offset by a decrease in the wholesale channel and royalties.

The wholesale channel was down 14.7 percent to 110.6 million euros, accounting for 67.9 percent of the total, mainly attributable to the American market.

Retail sales rose 19 percent to 47 million euros, representing 28.9 percent of the total, boosted by Italy, up 8 percent, and Asia, up 117 percent thanks to the change in the distribution model in China of the Moschino brand.

Royalties were down 27.8 percent to 5.3 million euros compared to the same period of 2022 following the termination of some licenses for the Moschino brand.

As of June 30, debt stood at 137.6 million euros net of the IFRS 16 effect, compared with 142.4 million euros at the end of March.

 In the last two years the Aeffe Group has made two strategic investments amounting to 90 million euros relating to taking full control of Moschino through the purchase of the 30 percent stake it did not own and the brand’s change of distribution in China.

SHANGHAI, CHINA - 2019/07/22: Love Moschino, diffusion line of Italian luxury fashion house Moschino, logo seen in Shanghai. (Photo by Alex Tai/SOPA Images/LightRocket via Getty Images)

Love Moschino, diffusion line of Italian luxury fashion house Moschino, logo seen in Shanghai. (Photo by Alex Tai/SOPA Images/LightRocket via Getty Images)

SOPA Images/LightRocket via Gett

It also acquired the license to produce and distribute the Love Moschino collections of women’s apparel in-house for 3.6 million euros.

In the first half, capital expenditures equaled 2.8 million euros, mainly channeled into third-party assets and purchases for software.

Aeffe also reported that Luca Gori, general manager of the beachwear and underwear collections, was exiting the company on Monday under a consensual agreement that includes a payment of 110,000 euros.





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