Aeffe Impacted by Reorganization

MILAN — Aeffe’s reorganization has impacted the performance of the group in the first nine months of the year. Before announcing on Friday afternoon the premature death of Davide Renne, the newly appointed creative director of Moschino, earlier in the day, its parent company reported a loss and a decrease in revenues in the period ended Sept. 30. This was mainly attributed to the changes in the distribution of Moschino and a general slowdown.

The net loss amounted to 17.8 million euros, compared with a net profit of 4.7 million euros in the same period last year.

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Sales dropped 8.8 percent to 252.8 million euros compared with 277.1 million euros in the first nine months last year. However, revenues in Asia, where the Moschino brand is now being directly distributed, have increased.

As reported, in 2021 Aeffe took control of Moschino’s distribution in mainland China, signaling the increasing relevance of that market for the label. This involved around 20 stores, which had been operated for the previous 10 years by Scienward Fashion and Luxury (Shanghai) Co. Ltd.

In addition to Moschino, Aeffe comprises the Alberta Ferretti, Philosophy di Lorenzo Serafini and Pollini brands.

Massimo Ferretti
Massimo Ferretti

“The results of the first nine months continue to reflect the reorganization and repositioning of the Group, marking a growth slowdown,” said executive chairman Massimo Ferretti, pointing to the strategies implemented for Moschino. “At the same time, Aeffe Group is dealing with a general unfavorable market situation conditioned mainly by geopolitical uncertainty, the pressure of inflation and interest rates and by climatic contingencies, which have significantly slowed down the sales of the winter collections in all markets.”

In the first nine months, Aeffe’s adjusted operating loss amounted to 8.6 million euros compared with an operating profit of 14.1 million euros last year.

Adjusted earnings before interest, taxes, depreciation and amortization, net of the extraordinary effects associated to the organizational restructuring of the group and to promotional events such as the 70th anniversary of the Pollini brand and the 40th anniversary of the Moschino brand, amounted to 15.3 million euros, compared with 37 million euros in the same period last year. The company attributed the erosion of margins to the contraction in revenues and to the new strategic course of Moschino, with the associated costs due to the change of the distribution model in China and the launch of the repositioning plan for the various Moschino collections.

The Milan Bourse did not take the numbers well, pushing shares down 7.43 percent in early afternoon trading and closing down 6.97 percent at 81 cents.

In the nine months, sales in Italy were down 7 percent to 107.9 million euros, representing 42.7 percent of the total. The retail channel showed a positive performance, up 3 percent, while the wholesale distribution contracted by 8 percent.

Revenues in Europe fell 15 percent to 77.9 million euros, accounting for 30.8 percent of the total, mainly impacted by the performance of the U.K. market, both at a wholesale and at retail.

In Asia and in the rest of the world, sales rose 8 percent to 52.9 million euros, representing 20.9 percent of the total. The change of distribution in Greater China for the Moschino brand is gradually stabilizing, said the company.

Moschino RTW Spring 2024
Moschino RTW Spring 2024

Revenues in America were impacted by a slowdown in the region, falling 31 percent to 14 million euros, representing 5.6 percent of the total.

In the first nine months, the group recorded a progression in the retail channel, offset by a decrease in the wholesale channel and royalties.

Retail was up 9.6 percent to 72.2 million euros, representing 28.5 percent of the total. The company said that “excellent results” were recorded in Asia, with retail sales climbing 56 percent thanks to the change in the distribution model in China of the Moschino brand.

The wholesale channel was down 13.6 percent to 173 million euros, representing 68.4 percent of the total.

Royalties decreased 31 percent to 7.7 million euros following the termination of some licenses for the Moschino brand.

Capital investments made in the nine-month period amounted to 4.8 million euros, mainly channeled to works on third party assets and purchases for software.

As of Sept. 30, net debt stood at 154.6 million euros net of the IFRS 16 effect, compared with 137.6 million euros at the end of June. The company noted that in the last two years Aeffe has made two strategic investments amounting to 90 million euros, relating to taking full control of Moschino through the purchase of the 30 percent stake it did not own and the brand’s change of distribution in China.

Aeffe also said that, starting next month, Ivan Perra, who currently holds the role of general manager Asia Pacific, will also assume the role of global retail and business development director for the Moschino brand.

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