Photographer: Billy H.C. Kwok/Bloomberg

Armani Streamlines Its Brands, Store Network as Sales Drop

  • Italian fashion house shrinks seven labels to three main lines
  • Sales fell 5% last year in first annual decline since 2009

Giorgio Armani SpA is pushing ahead with plans to streamline its brands and store network after the Italian fashion brand recorded its first annual sales decline since 2009.

The Milan-based company is shrinking from seven labels to three main lines covering everything from haute couture to jeans to home furnishings. It’s following a similar move by Burberry Group Plc, which combined three sub-brands under a single banner last year.

“2016 proved to be a difficult year for the fashion and luxury sector,” Chairman and Chief Executive Officer Giorgio Armani said in a statement, adding that the company is “operating as always with a view to continuity and long-term perspective.”

Sales at privately held Armani Group fell 5 percent in 2016 to 2.5 billion euros ($2.9 billion), the company said, although profit rose to 271 million euros from 241 million euros due to cost cutting. The Italian company joins other fashion companies, including Ralph Lauren Corp., Burberry and Michael Kors Holdings Ltd., that have been scaling back distribution in response to a slowdown in U.S. retail traffic and a rise in online shopping.

Armani will bring its Prive haute couture line and the furniture and homewares brand Armani/Casa under the umbrella of the high-end Giorgio Armani brand, while the Collezioni and Jeans labels will be folded into the more accessibly priced Emporio Armani. A/X Armani Exchange will continue to operate as the company’s mass-market arm with a younger, more informal style.

The company’s 83-year-old founder disclosed his intention to cut the Collezioni and Jeans sub-brands in an interview with Women’s Wear Daily earlier this year. The company hopes that simplifying the portfolio will strengthen individual brands, it said Tuesday.

Armani blamed “external factors” including slower growth in China for the drop in sales, adding that “there has been a general change in purchasing behaviors and attitudes.”

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