Mar 24, 2021
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Aeffe closes 2020 with net loss and 23% decline in sales

Mar 24, 2021

As was perhaps to be expected, the Covid-19 pandemic has had a negative impact on Aeffe's annual results. The Italian fashion group, which owns brands including Alberta Ferretti, Philosophy, Moschino and footwear maker Pollini, and holds licenses for the likes of Jeremy Scott, closed 2020 with a 23.4% year-over-year decline in its annual revenues, which totaled 269.1 million euros. In constant currencies the decrease was 23.3%.

Sales at Alberta Ferretti nosedived 44% in 2020 - @albertaferretti

The company reported an overall loss of 21.4 million euros for the year, down from income of 11.7 million in the previous year. Taking into consideration the effect of the first application of the IFRS 16 accounting standard, adjusted net loss at the company was 16.3 million euros. 

As for EBIT, it fell from a positive value of 25.1 million euros in 2019 to a negative 24.5 million euros. Aeffe's EBITDA , on the other hand, came to 4.5 million euros, compared to 53.1 million euros in 2019. 

In order to limit the impact of the pandemic, the company significantly reduced its fixed costs, while also strengthening its relationships with commercial partners, especially in Asia, as well as its digital operations, with a particular focus on customer service and communication. 

"In a year marked by the pandemic, the group has demonstrated effective management capacity, both financially and in terms of marketing," said Aeffe executive chairman Massimo Ferretti in a release. "Significant new initiatives were launched in 2020 that will complement the future development strategy, from investments in virtual showrooms optimization to growth on e-commerce platforms, together with successful travel retail projects in Greater China."

Last year, the company saw its sales decline across all of its segments, brands, regions and distribution channels. Once again, the Moschino label, which continues to grow in importance at the group, representing 80% of its total revenues in 2020, compared to 75% in 2019, put in the strongest performance. 

With revenues of 215.4 million euros in 2020, the brand's sales fell only 17.8% in constant currencies, compared to a decline of 26.4% at Lorenzo Serafini's Philosophy, where sales totaled 13.4 million. At Pollini, sales dropped 37.7% to 22.4 million, while at Alberta Ferretti they plummeted 44.3% to 14.6 million. Revenues from the company's other activities fell 60.9% to 3.3 million. 

In Italy, which is the principal market of the San Giovanni in Marignano-based group, representing 45% of its revenues, the company posted a 24.2% drop in its sales. Excluding Italy, the decline in Europe was only 4.9%. In Asia and the rest of the world, the decrease was 37.6%, with Greater China seeing a drop of 35% and a notable recovery in the fourth quarter, while in America, sales fell 36.2% in the period. 
As of 31 December, Aeffe has 59 directly owned and operated stores and 144 franchise locations, making for a total of 203, compared to 224 in the prior year. Retail contributed 24% of the company's revenues in 2020, reflecting a 32.2% reduction in the period, while wholesale revenues, which represented 72% of the group's total sales, fell 19.9%.

Despite the ongoing uncertainty surrounding the markets, the group put up a confident front, claiming to be encouraged by "signs of improvement" in the last quarter, as well as by strong reactivity to its brands, with its current sales campaign for Fall/Winter 2021-22 having seen "results above expectations."

Aside from China, Aeffe is looking to Europe for its recovery, especially the UK, where the vaccination campaign is well under way. The U.S. and the Middle East are also among the company's priorities. "The group will continue to focus on strengthening the online business, digital communication and distribution in strategic markets such as the Far East," concluded the company's press release. 

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