Italy's Armani sees first signs of recovery after 2018 sales fall

Sales at Italian fashion group Giorgio Armani fell for the third year in a row in 2018, although the company said that its restructuring strategy had begun to pay off this year.

The group had already warned last year that it only expected a return to growth from 2020 onwards, largely as a result of an internal reorganisation aimed at streamlining its shop network and its brand portfolio under three labels.

In 2018, revenue fell by 8% at constant exchange rates (-10% at current rates) to 2.1 billion euros (£1.9 billion), while earnings before interest, taxes, depreciation and amortisation (EBITDA) decreased to 314 million euros from 438 million posted in 2017, the company said on Friday.

"I am confident in the strategic direction we've taken being the most appropriate to consolidate the leading position of the Armani Group and its brands in the luxury/lifestyle segment," said Giorgio Armani, who has just turned 85 and still holds the positions of chairman, CEO and general manager.

The positive signals relating to sales of the 2019 spring/summer season in the first part of the year confirmed the label, founded 44 years ago and Italy's second biggest after Prada <1913.HK>, was heading in the right direction, he said.

The group has strong liquidity of 1.3 billion euros at the end of last year, up 300 million euros from a year earlier. Armani said this allowed the group, which has no debt, to remain independent and increase future investments based on its own coffers.

In 2018, investments rose by 28% to 106 million euros.

Overall brand revenues, including those from licensing, stood at 3.8 billion euros, in line with 2017 when stripping out currency moves.

Though he has set up a foundation in his name and indicated that part of his high-end fashion empire should be transferred into the charitable organisation, the designer has still not named his successor for when he steps down.

The group announced on Friday the appointment of two deputy general managers, one responsible for markets and commercial activities, and the other in charge of finance and operations.