The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
MILAN, Italy — Italian fashion group OTB, which owns brands including Diesel, Maison Margiela and Marni, is keeping its 2020 revenue target for now, despite a recent slowdown caused by the coronavirus epidemic, its chief executive told Reuters on Tuesday.
However, Ubaldo Minelli said that could change in April, after the end of the group's first quarter. "I hope not, but I can't rule it out," he said.
OTB — which stands for Only The Brave — is targeting 12-13 percent annual average revenue growth, at constant exchange rates, in its 2019-2021 plan.
Minelli's comments came after the group reported a return to sales growth and a strong improvement in profitability for 2019.
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Revenues at current exchange rates grew by 6.4 percent last year to €1.53 billion ($1.75 billion), an increase of around 4.5 percent at constant exchange rates.
Core profit rose to 190 million euros from €41.5 million a year earlier.
"Results in 2019 went beyond our expectations because they included the turnaround of Diesel," Minelli said, referring to the group's main brand, which had weighed on 2018 results.
"This year also started very well," he said, adding, however, that this had been followed by the coronavirus outbreak, which has spread from China, with Italy quickly becoming the hardest hit country in Europe.
On February 22, a day after the first cases were reported in northern Italy, OTB set up a crisis unit to deal with the situation. Its tasks include quantifying the revenue and cost impacts for the group, and identifying steps to minimise them.
Minelli said if the situation returned to normal from Tuesday, the overall impact for the group would be negligible.
"But it is clear that this situation does not end today, so we wait and see," he said, speaking two days after the Rome government imposed a virtual lockdown on the country's wealthy north to try to contain the spread of the virus.
Minelli said that, as in the past, OTB was looking at possible acquisition opportunities.
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"We have the means to be able to do this, thanks to about 900 million equity and lack of debt," he said, adding however that "there's nothing on the table today."
By Claudia Cristoferi; editor: Mark Potter
The group’s flagship Prada brand grew more slowly but remained resilient in the face of a sector-wide slowdown, with retail sales up 7 percent.
The guidance was issued as the French group released first-quarter sales that confirmed forecasts for a slowdown. Weak demand in China and poor performance at flagship Gucci are weighing on the group.
Consumers face less, not more, choice if handbag brands can't scale up to compete with LVMH, argues Andrea Felsted.
As the French luxury group attempts to get back on track, investors, former insiders and industry observers say the group needs a far more drastic overhaul than it has planned, reports Bloomberg.