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Mediobanca: French groups dominate European fashion, but Italy is holding its own
On February 13, Italian investment bank Mediobanca held its firsts annual ‘Fashion Talk’, presenting the results of a fashion industry study, called Focus Moda, carried out by its research department.
The study analysed the 2013-2017 results for 163 Italian fashion companies with annual revenue above €100 million (in the 2017 financial year), and compared the results of the top 15 of them with those of other leading European groups.
The aggregate added value generated by the 163 companies examined was equivalent to 1.3% of Italy's GDP in 2017, an increase of 0.2% compared to 2013. Notably, one third of the companies’ aggregate revenue was generated by 66 foreign-owned firms, chiefly owned by groups from France (26 companies), Switzerland (6), the USA (6) and the UK. Of the 163 companies surveyed, 48% are based in the North of Italy, while the most highly represented market sectors were apparel, leather goods and eyewear.
Jewellery was the most dynamic sector; textile and apparel recorded similar results, while the top performers in terms of profitability were in the leather goods and eyewear sectors. In the course of the five years in question, sales grew by 28.9% but profitability was slightly down (-0.7%), though not for all sectors: EBIT results were in fact up by 3.5% for textiles and by 2.4% for jewellery. About 63% of the aggregate revenue was generated outside Italy, with peaks of 89.8% for eyewear, 72.5% for textiles and 66.1% for leather goods; apparel and jewellery were stable, with export shares of 53.5% and 36.4% respectively.
The top 15 companies in the sample, all of them above the €900 million revenue mark in 2017, recorded higher profitability than the remaining companies, though it decreased slightly over the five-year period. Smaller companies, whose EBIT actually rose in the period, instead posted an average annual revenue rise that was higher than that of the top 15. “It is interesting to note that, in 2013, 77.7% of the sample's net income was generated by the top 15 firms, but the share fell to 56.2% in 2017. This means that profits are distributed more equitably between the two groups of companies,” said Nadia Portioli of Mediobanca’s research department.
The 15 leading Italian groups were then compared with their European homologues, for total of 43 groups which exceeded a revenue of €900 million in 2017. Italy led the ranking by number of companies, but France was top of the table in terms of revenue, with an aggregate of €68.4 billion, compared to Italy’s €30.3 billion.
“The first three French groups alone, LVMH, Kering and Hermès, have an aggregate revenue which is almost equal to that of all 163 Italian companies examined,” said Portioli, adding that “Danish and Spanish groups were more dynamic in the period, posting double-digit growth, while Swiss firms experienced a downturn, chiefly due to the performance of the Swatch group. On average, 85.2% of the revenue of the European groups examined was generated abroad, compared to 78.3% for Italian companies, which therefore have ample room for growth outside their own country. The UK stands out, with only 52.8% of its companies’ revenue coming from exports. Besides major names like Burberry in fact, there are [in the UK] several smaller labels which sell only locally, but which could expand internationally in the future, as Primark is doing.”
Overall, Mediobanca’s Focus Moda showed that Italian companies have higher capitalisation and cash-flow than their European counterparts, but are growing at half the rate and are less profitable. “The Italian fashion industry is robust and export-driven: demand for made-in-Italy products is ubiquitous, and Italian creativity is much sought-after. [Italy] is small and grows more slowly, but it is holding its own on the European stage,” concluded Portioli.
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