Giorgio Armani Stands by Own Strategy, Reports Gains in 2023 Sales
MILAN — Giorgio Armani continues to buck the trend and to do things his own way.
Helming one of the few remaining independent luxury fashion groups, after celebrating his 90th birthday on July 11, the designer on Monday touted the group’s solidity, despite the “numerous critical challenges in the international context.”
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Armani, the group’s chairman and chief executive officer, said 2023 “ended on a positive note” and that he continues to be “steadfast in my belief that a focus on continuity and a pragmatic, consistent approach — independent by current trends and market conditions and rooted in the principles that have always underpinned my creative and managerial philosophy — is the only way to navigate the challenges and uncertainties that characterize today’s environment. We are well-prepared to manage a market slowdown without needing to maximize year-on-year profit at all costs.”
While acknowledging a slowdown in Asia at the end of 2023 and in early 2024, the designer’s namesake group, which will mark its 50th anniversary next year, closed last year with a gain in revenues and net profit. Also, it leverages a net cash pile of more than 1 billion euros.
The group closed 2023 with net revenues of 2.44 billion euros, up 4 percent compared with 2.35 billion euros the prior year. At constant exchange rates, revenues were up 6 percent.
Net profit before tax amounted to 224.5 million euros, a 4.4 percent increase compared with 218 million euros in 2022.
Direct brand turnover, including revenues generated by licensees, stands at approximately 4.5 billion euros. This was a 2.6 percent decrease compared to 2022 and was attributed to the contraction of the accessible segment of the luxury market, most evident in the second half of 2023. In 2017, the designer decided to streamline his portfolio of brands, effective with the spring 2018 season. That meant that the Armani Collezioni and Armani Jeans brands were integrated and merged into the Emporio Armani and A|X Armani Exchange lines, respectively. The goal was to strengthen the individual brands and maximize their potential in an increasingly competitive and changing market.
As reported, Armani has also been vocal about choosing to limit the offer of new collections, responding to the current moment, aligning collections in stores to the seasons.
The estimated total retail value of Armani-branded products worldwide therefore stands at approximately 6.5 billion euros for 2023.
“Our commercial and business decisions are consistently guided by a commitment to uphold our brand values and a focus on medium- to long-term objectives, without forcing either sales or margins,” said Giuseppe Marsocci, deputy general manager and chief commercial officer of the group. “This is exemplified by our containment of price increases. In recent seasons, we have sacrificed some margin points to avoid raising retail prices to the levels that inflation would have dictated. This strategic approach is confirmed by the stability in the number of our directly managed boutiques, where openings and closures throughout the year effectively offset each other, as well as the selective reduction of point of sales in the wholesale channel, including those operated by licensees. These measures allow us to achieve business results that are healthy, robust, balanced and organically aligned to market conditions.”
In 2023, operating profit stood at 215 million euros, in line with 214 million euros in 2022.
After IFRS 16, earnings before interest, taxes, depreciation and amortization rose to 523 million euros compared with 519 million euros.
All sales channels and markets contributed to the growth in 2023.
Direct retail accounted for 54 percent of revenues, while wholesale sales represented 38 percent of the total.
Royalties from licenses, including the successful eyewear collections with EssilorLuxottica and beauty and fragrances with L’Oréal, for example, and other revenues made up the remaining 8 percent.
Europe generated 49 percent of revenues in 2023, while the Americas and Asia Pacific each contributed to 21 percent of the total.
The rest of the world represented 9 percent of the total.
Armani was always driven by a medium-long term outlook, reflected by the group’s investments last year, which doubled to 142.5 million euros from 70.5 million euros in 2022, and were aimed at restructuring its retail network and ongoing commitment to the development of digital and IT structure.
Despite the progressive acceleration of investments, the group’s financial and capital structure allowed it to support the management and self-financing of its investment plans. At the end of 2023, net cash and financial investments amounted to 1.03 billion euros, compared with 1.1 billion euros at the end of 2022. Shareholder equity stood at 2.1 billion euros, corresponding to approximately 50 percent of total assets.
Daniele Ballestrazzi, deputy general manager and chief operating and financial officer of the group, underscored how the net profit and its “short-term performance” was “not compromised” by the “substantial economic and financial commitment to long-term goals.”
As reported, in October, the designer is expected to fly to New York to celebrate the opening of his company’s new building on Madison Avenue, entirely redesigned to include residential units, an Armani/Ristorante and the new Giorgio Armani and Armani/Casa boutiques. Coinciding with the unveiling, Armani has decided to parade his namesake brand’s spring 2025 collection in New York and not in Milan. The fashion show is scheduled to take place on Oct. 17 and is to be followed by a party, which again is sure to attract a slew of longtime friends of the designer.
Further building the designer’s design world, an Armani Hotel will rise in Diriyah, a 300-year-old site located a 15-minute drive from Riyadh, in the Kingdom of Saudi Arabia, which is expected to be completed in 2026. The area is home to the UNESCO world heritage site At-Turaif, recognized as one of the world’s foremost mud-brick cities and the valley and lush palm groves of Wadi Hanifah. This will be the third Armani Hotel in the world, following Dubai and Milan.
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