Armani earnings surge

Giorgio Armani reported double-digit growth in profits and revenues in 2005, resulting from store openings and further diversification. The company added that first quarter retail sales rose 8 percent.

Earnings before interest and tax for the year ended 31 December soared 18 percent to €191 million, while sales rose 10 percent to €1.42 billion. In 2004 sales grew only 3.5 percent and profits suffered from advertising costs. The company will present net profit results when it publishes it annual report in May.

“As the sole shareholder of an independent company, I am often asked about plans for the future,� said 71 year-old president and chief executive Giorgio Armani. “The performance of this company speaks for itself.�

He said his brand is now worth €5 billion at retail and therefore among the most powerful. He added that the company has enough internal resources to fund organic growth.

Although Armani has denied he intends to sell his company or float it on the stock market, he did not dismiss the latter idea out of hand. In an interview with The Wall Street Journal published on Monday, he said, “The most suitable solution is perhaps the stock market…I have to think of the future of the company. I also have to give signals to the people who work here.�

Last year the company opened 41 stores and renovated 22 boutiques. John Hooks, commercial and marketing director and president of Giorgio Armani Japan told WWD that the company plans to continue at this pace, opening at least 40 stores this year and next year. “I think that we'll be able to match the figure in 2006 and in 2007 as well,� he said. “We want to maintain this sort of momentum.�

Retail store sales represent about one-third of the company's consolidated revenue, or €476 million. Retail revenue rose 3 percent in the US, 10 percent in the EU and 11 percent in Japan. China experienced a sales growth of 24 percent thanks to a spate of store openings there in the last few years.

Meanwhile, Armani Casa retail revenues soared 40 percent to €30 million, thanks to the addition of 30 sale points last year. The worldwide total is now 75, and another 40 openings are in the pipeline for this year.

The company currently has a positive balance of €443 million, compared with €397 million last year.

Its wholesale business – which includes wholesale to third parties as well as wholesale values of merchandise sent to the company's own stores and licensed products – gained 10 percent to €1.85 billion.

Apparel generated 52 percent of total revenues, making it the largest product category. The two biggest brands are Giorgio Armani and Emporio Armani, collectively accounting for 59 percent of sales. Fragrances represented 28 percent of group sales.