Armani Sticks to Strategy In Wake of COVID- 19

● The Giorgio Armani company addressed the future while reporting a rise in revenues in 2019, although some factors dented earnings.

MILAN — Giorgio Armani was quick to react to the coronavirus emergency and he is relying on his group’s strength and organization to weather the months ahead, despite the still-looming uncertainties globally, and without veering from the strategies he mapped out three years ago.

“Although it is still not possible to estimate the economic impacts of the COVID-19 pandemic, the group has the resources and a widely consolidated patrimonial and financial structure allowing it to face the uncertainties and continue with determination the strategic plan founded on quality and the value of its own identity for present and future actions,” stated the company on Thursday

as it released its 2019 profits and revenues.

While net profits last year fell 18.4 percent to 124 million euros from 152 million euros in 2018, sales rose 2.3 percent to 2.16 billion euros.

Overall brand revenues, including those from licensing, totaled 4.15 billion euros, climbing 9 percent “with a trend that was better than expected” and a year earlier than forecast following Armani’s strategy to streamline his brands’ portfolio and distribution.

The goal was reached thanks in particular to a 7 percent like-for-like increase in sales at the group’s stores and on its online store “after three years of a planned decrease as part of a strategic simplification and requalification of the brands’ portfolio and the distribution network, which targeted results in the medium, long-term.”

In February 2017, Armani revealed he was planning to focus on the Giorgio Armani, Emporio Armani and Armani Exchange labels, effective with the spring 2018 season. In this context, the Armani Collezioni and Armani Jeans brands have been integrated and merged into the Emporio Armani and Armani Exchange lines, respectively. The goal is to strengthen the individual brands and maximize their potential in an increasingly competitive and changing market.

In the 12 months ended Dec. 31, net assets were in line with the previous year, totaling 2.05 billion euros, while the group’s cash pile amounted to 1.21 billion euros. This compares with 1.31 billion euros at the end of 2018, but Armani underscored that the group had continued to invest to implement the new strategy, to renovate the collections and stores and to expand its product offer as the number of boutiques increased.

Last year, Armani invested 105.5 million euros, compared with 105.7 million euros in 2018.

In 2019, while it continued to streamline its wholesale distribution, the group expanded its direct distribution network by acquiring points of sale in a number of China provinces, mainly Guangdong and Sichuan, in Macau and in Mexico. At the end of 2019 the number of directly operated stores totaled 598, up by 70 units compared with the end of 2018.

The designer, who turns 86 on July 11, is chairman and chief executive officer of his fashion group as well as the owner.

In 2019, earnings before interest, taxes, depreciation and amortization decreased 14.7 percent to 268 million euros, compared with 314.3 million euros in 2018.

Consistent with the medium to longterm strategy, the steps taken in 2019 caused earnings before taxes to dip 12 percent to 175 million euros, compared with 200 million euros in 2018, but the group said the decrease was “more contained than expected.”

As reported, the Armani Group in March converted all its four Italian production sites to produce single-use medical overalls for the individual protection of health-care providers fighting the coronavirus.

After pledging to donate 1.25 million euros to Italy’s Civil Protection and a range of Italian hospitals and institutions in the country — including the Luigi Sacco, San Raffaele and the Istituto dei Tumori in Milan and Rome’s Istituto Lazzaro Spallanzani — the designer also decided to contribute to the hospitals of Bergamo and Piacenza, both badly hit by the COVID-19 pandemic, as well as the Versilia hospital in Tuscany, bringing the total of his donations to 2 million euros.

Armani promptly understood the effects of COVID-19 and decided to show his fall 2020 collection behind closed doors in February.

On Thursday, the company noted that “precautionary measures that were increasingly more stringent” were taken at all Armani sites, including the Silos exhibition space and the group’s stores, restaurants and hotels around the world. The stores have all reopened, as well as the restaurants, except for the units in Munich and Paris. The Armani Hotel in Milan has also reopened.

Armani Casa this year marks its 20th anniversary. Despite the pandemic, the group’s Armani/Casa project in New York on Madison Avenue, the longtime address of the designer’s flagship that opened in 1996, is expected to be completed in 2023. The four-level, 16,000-square-foot store will be developed into a 96,000-squarefoot building that will house a flagship and 19 luxury Armani/Casa residences.

On Thursday, Armani also pointed to his decision to rationalize the group’s calendar.

In April, the designer penned an open letter to WWD, praising a slower fashion movement, revealing plans to realign collections with seasons in stores. “The decline of the fashion system as we know it began when the luxury segment adopted the operating methods of fast fashion, mimicking the latter’s endless delivery cycle in the hope of selling more, yet forgetting that luxury takes time, to be achieved and to be appreciated. Luxury cannot and must not be fast,” he wrote.

“It makes no sense for one of my jackets or suits to live in the shop for three weeks before becoming obsolete, replaced by new goods that are not too different.

“I don’t work like that, and I find it immoral to do so,” continued Armani in his letter, expressing his belief in timeless elegance and authenticity — hence his refusal of itinerant “grandiose shows” around the world. “This crisis is an opportunity to slow down and realign everything; to define a more meaningful landscape. I have been working with my teams for three weeks so that, after the lockdown, the summer collections will remain in the boutiques at least until the beginning of September, as it is natural. And so we will do from now on.”

Releasing the 2019 results, Armani noted that the “choices are in line with reducing inefficiencies and wastes and consistent with the widespread requests for sustainability across all sectors.”

In May, Armani said his namesake and Emporio Armani men’s and women’s shows will be presented in September here. The format is still being defined, however.

He also said the Armani Privé show will be postponed until January 2021 and will be no longer held in Paris, where the designer has displayed his couture collections for years, but in Milan at his storied headquarters in Via Borgonuovo, the 17th-century Palazzo Orsini. The collection will be seasonless, comprising winter and summer pieces.