Armani’s Fashion Empire Remains Strong Despite International Challenges
Italian fashion designer Giorgio Armani continues to defy expectations by maintaining independence within the luxury fashion world. After celebrating his 90th birthday on July 11, on Monday he shared his optimism for his fashion group’s stability, despite encountering numerous global challenges.
“2023 ended on a positive note” said Armani. He also expressed confidence in his steadfast approach which is “independent by current trends and market conditions and rooted in the principles that have always underpinned my creative and managerial philosophy”. He believes that this is the only way to face present-day challenges and uncertainties. Confidence was also expressed in the organisation’s readiness to tackle a market slowdown without resorting to relentless profit maximisation.
Despite noting a slowdown in Asia around the end of 2023 and early 2024, Armani’s eponymous group, set to celebrate its 50th anniversary in 2024, finished 2023 with increased revenues and net profit. The group reportedly has a net cash pile exceeding 1 billion euros as well.
The fashion powerhouse closed 2023 with 2.44 billion euros in net revenues, a 4% increase from the 2.35 billion euros earned the previous year. According to constant exchange rates, these revenues saw a 6% increase.
The net profit before tax glimpsed a rise of 4.4% compared to the previous year, amounting to 224.5 million euros, compared to 218 million in 2022. Direct brand turnover, including revenue from licensees, came in at around 4.5 billion euros, a 2.6% decline compared to 2022 due to a contraction in luxury market’s accessible segment.
Armani is also becoming increasingly selective about releasing new collections, with the aim of maintaining the alignment of collections in stores with the respective seasons.
Giuseppe Marsocci, Deputy General Manager and Chief Commercial Officer of the group, affirms their commitment towards brand values and medium to long-term objectives, characterised by careful price increment strategies and balance in the number of their directly managed boutiques. This focus has produced consistent, robust, and balanced business results that organically align with market conditions.
In 2023, the operating profit amounted to 215 million euros, about 1 million more than 2022, while EBITDA rose to 523 million euros from 519 million in 2022.
All sales channels and markets contributed to 2023’s growth, with Europe generating 49% of revenues. The Americas and Asia Pacific each contributed to roughly 21% of the total, and the rest of the world represented about 9% of the total earnings.
Armani’s group has also doubled its investments from the previous year, from 70.5 million euros to 142.5 million euros in 2023, focusing on restructuring the retail network and the ongoing enhancement of digital and IT structures.
Despite escalating investments, the group’s financial and capital structure comfortably supports its investment plans’ self-financing and management. While marked by investments, the net profit and short-term performance were not compromised, underlining the company’s robust economic commitment to long-term goals, according to Daniele Ballestrazzi, Deputy General Manager and Chief Operating and Financial Officer of the group.
Giorgio Armani’s continued success can also be attributed to his consistent drive to push boundaries, as evidenced by upcoming ventures. One such venture includes the opening of a redesigned company building featuring residential units, an Armani/Ristorante, and new Giorgio Armani and Armani/Casa boutiques in New York. The spring 2025 collection will be showcased as a part of the event in October 2024.
Further expansion of the Armani design world includes the construction of an Armani Hotel in Diriyah, Saudi Arabia, scheduled for completion in 2026. This hotel will be the third of its kind, following those in Dubai and Milan.
