The Armani empire endures luxury crisis

Business seems to be going well at Armani. Recently, in presenting his latest financial results, the legendary designer and entrepreneur was able to see his forward-thinking and pragmatic strategy bear fruit. Armani indeed declared that 2023 ended positively, although acknowledging a slowdown in Asia towards the end of 2023 and the beginning of 2024, with growth in both revenue and net profit, supported by a net cash reserve exceeding 1 billion euros. In 2023, the group recorded net revenues of 2.44 billion euros, up 4% from 2.35 billion euros the previous year. When adjusted for constant exchange rates, revenue growth was 6%. Net profit before taxes reached 224.5 million euros, an increase of 4.4% from 218 million euros in 2022. However, the brand's direct turnover, including licensee revenues, was around 4.5 billion euros, representing a 2.6% decline from the previous year - a drop attributed to a contraction in the accessible fashion segment mostly occurring in the second half of 2023. Earnings before interest, taxes, depreciation, and amortization (EBITDA) slightly increased to 523 million euros from 519 million euros, after IFRS 16 adjustments. All sales channels and markets contributed to this growth, with direct retail accounting for 54% of revenues and wholesale sales 38%. Royalties from licenses, including successful collaborations with EssilorLuxottica for eyewear and L'Oréal for beauty products and perfumes, and other revenues made up the remaining 8%.

And at a time when even the inexhaustible Chinese market seems to be becoming more conscientious with its consumption, Armani's business remains solid: Europe generated 49% of revenues in 2023, while the Americas and Asia Pacific each contributed 21%. The rest of the world accounted for 9%. Reflecting a medium-to-long-term vision, the group's investments doubled in 2023 to 142.5 million euros compared to 70.5 million euros in 2022. These investments focused on restructuring the retail network and improving digital and IT infrastructure. But while groups like LVMH and Kering have borne the weight of their investments, Armani's solid financial structure has allowed the group to support and self-finance its plans. At the end of 2023, net liquidity and financial investments amounted to 1.03 billion euros, compared to 1.1 billion euros at the end of 2022. Daniele Ballestrazzi, deputy general manager and chief operating and financial officer, emphasized that net profit and its «short-term performance» were not compromised «by the substantial economic and financial commitment for long-term goals».

The future outlook seems bright, especially as between the founder's birthday this year and the fiftieth anniversary of the group he created, the brand's activities have become even busier than usual. In October, Giorgio Armani will travel to New York for the inauguration of a new corporate building on Madison Avenue, redesigned to include residential units, an Armani/Ristorante, and new Giorgio Armani and Armani/Casa boutiques – another business area that many brands are exploring but in which Armani has always been a pioneer. In conjunction with this event, Armani will present his brand's SS25 collection in New York on October 17, followed by a celebratory party. Additionally, a new Armani Hotel is planned for Diriyah, Saudi Arabia, opening in 2026, further expanding Armani's global presence in the luxury hospitality sector.