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Armani Group is not immune to the wider luxury industry woes, notably in China.
The statement by the privately held Italian company published Monday included an update on first-half revenues this year, which declined in the single digits, in line with the drop in the second half of 2023. This “reflects an adjustment within the luxury market, especially in the Asia excluding-Japan region and the more accessible segment of the offer,” the company said.
Armani Group, whose founder and chairman just turned 90 years old, reported revenues of €2.45 billion in 2023, up 6 per cent growth year-on-year at constant exchange rate. Direct brand turnover, including revenues generated by licensees, stands at approximately €4.5 billion, a 2.6 per cent decrease compared to 2022. This confirms “the contraction of the accessible segment of the luxury market, most evident in the second half of 2023”, the company noted.
The luxury industry is going through a rough patch. “The Armani earnings dovetail with the sector reporting so far, with a sense that we are confronting a global cyclical slowdown starting at the bottom of the social pyramid. Hence, aspirational middle class consumers — and what they typically buy — seem under pressure,” says Bernstein managing director luxury goods Luca Solca.
Profitability was at the centre of conversations during luxury earnings calls in recent days, as it’s complicated to preserve margins with subdued demand. But Armani’s profitability held up well last year, the management says. EBIT and EBITDA in 2023 remained in line with the previous year.
“This substantial economic and financial commitment to long-term goals has not compromised our short-term performance: in 2023, the Armani Group achieved a pre-tax net profit of €224.5 million, an increase of approximately 4.4 per cent compared to 2022,” Daniele Ballestrazzi, deputy general manager and chief operating and financial officer of the group, said.
“Despite the slowdown in the second half of 2023 and numerous critical challenges in the international context, the year ended on a positive note, underscoring the group’s solidity,” Giorgio Armani, chairman and CEO of the Armani Group, said. “I remain steadfast in my belief that a focus on continuity and a pragmatic, consistent approach — independent by current trends and market conditions and rooted in the principles that have always underpinned my creative and managerial philosophy — is the only way to navigate the challenges and uncertainties that characterise today’s environment. We are well-prepared to manage a market slowdown without needing to maximise year-on-year profit at all costs.”
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