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Versace posts loss for fiscal year 2016 despite revenue growth
As reported by Italian press agency Radiocor-Il Sole 24 Ore, 2016 was a slow year for Milanese fashion group Versace, which is still 80% owned by the eponymous founding family, the remaining 20% being held by US investment fund Blackstone since 2014.
In a break with the past, this year Versace has refrained from publishing its financial results, also due to the top management changes which took place last spring, with the arrival of new General Manager Jonathan Akeroyd.
The fashion label simply issued a brief communiqué stating that "in 2016 it continued to grow, and to invest in its distribution network." Consolidated revenue did indeed "rise by 4%, reaching €669 million, and cash flow has improved," wrote Versace. Yet, its revenue in 2015 had recorded a 17.5% increase.
Versace underlined how last year it made significant investments, to the tune of €45 million, chiefly to bolster its retail distribution network. "In order to set the business on a solid growth track for the coming years, the corporation has undertaken major organisational changes. With new management and a clear strategy, Versace continues to invest on its brand, products, distribution and advertising," wrote the label.
According to Il Sole 24 Ore, in 2016 Versace's operating costs rose by €60.7 million, reaching €629.5 million. The label has actually opened 34 new monobrand stores last year, and another four in the first quarter 2017.
The retail investment and rise in operating costs have caused a drastic decrease in margin: EBITDA was 6.6% of total revenue in 2016, compared to 12.5% a year earlier, falling by 45.5% to €44.3 million.
Sales growth was concentrated in Asia (+8.8%) and North America (+2.5%), while in Europe sales fell by 1.1%.
Versace's retail sales rose by 28.9% to €400.7 million, while the wholesale channel was relatively stable, with sales for €199.1 million, compared to €194.9 million the previous year.
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