Happy Armani buoyant in 2022, says China bounces back in Q1 2023

By

Sandra Halliday

Published
May 25, 2023

Armani Group’s 2022 results have shown ongoing progress at one of the world’s best-known luxury names as net revenues jumped 16.5% to €2.35 billion and profit rose even faster.

In fact, earnings before interest and tax (EBIT) leapt 30% to €202.5 million. This was helped by direct brand revenues and retail sales all continuing to rise.

And the best news is that despite some in the fashion sector reporting slowdowns in 2023, Armani’s Q1 trends show net revenues up 18% year on year.

Asia, which had been weak due to Covid issues in China during 2022, has recovered in Q1 and is running 14% higher. Meanwhile Europe is continuing its strength with a 22% rise and the Americas is up 10%. Although that American figure is lower than last year’s rise, the company said the Asian rebound should easily make up for the slowdown.

2022 STRENGTH

Looking back at last year, as well as those impressive revenue and EBIT jumps, EBITDA leapt 25% to €289 million.

The group said that despite the “global economic environment that is still characterised by multiple crises”, all sales channels registered “significant growth” and showed a “very balanced breakdown” with direct retail up 17%, wholesale up 16%, and e-commerce up 9%.

The company also highlighted that in many cases, it exceeded industry benchmarks with these rises, especially in the case of the apparel category. 

Pleasingly, it did well in both Europe and the Americas, with revenue up 24% and 19.5%, respectively. But, as mentioned earlier (and as many companies have also experienced), Asia was weaker. In this case it declined as much as 6.3%, dragged down by ongoing Covid restrictions in China that only ended this year.

Still, with those restrictions a thing of the past, the potential for Asia to soar this year is clear and the aforementioned Q1 growth is a sign of that already happening.

INVESTING FOR GROWTH

Armani called out the fact that its medium-to-long-term strategy has seen it increasing its investment in communication initiatives (+22% compared to 2021) and in other areas such as its digital and IT infrastructure, and the renovation and redevelopment of stores (+25%).

It didn’t give specific figures for its spend here, but said this “major economic and financial commitment” hasn’t dented its profits in the short term. In fact, pre-tax net profits of €218 million this time were up 16.4% year on year and up 24.5% against the pre-pandemic year.

The company’s investment has also come alongside a reorganisation that saw it focusing on its three main brands (Giorgio Armani, Emporio Armani, and Armani Exchange), with this leading to “highly satisfactory sales levels” and “even better growth trends in operating profitability”. 

That was borne out by 2022 direct brand turnover (that is, sales of Armani branded products made directly by the group and third-party licensees) reaching €4.6 billion, with estimated retail sales of over €6.5 billion. 

Giuseppe Marsocci, Deputy General Manager and Chief Commercial Officer of the group, said it’s “advancing, well ahead of schedule, towards the objectives set for 2025, the year that marks the 50th anniversary of Giorgio Armani.

With that in mind, it’s worth giving the last word to Giorgio Armani himself. He said: “The medium-long term strategic path I have chosen to undertake continues to prove effective as is evidenced in the results. I am firmly convinced that operating with a vision aimed at continuity, following a concrete and consistent approach, centred on the values that have always underpinned my creative and managerial philosophy, is the only way to face the challenges and unforeseen events that characterise the current global scenario. In an increasingly difficult and competitive context, I am proud to have been able to maintain my independence and the stability of the group, also thanks to the work and commitment of my collaborators and employees.”