Stefanel unveils Nuance sales breakdown and predicts stable times ahead for travel retail operation

ITALY. The Nuance Group co-owner Stefanel has reported strong growth in its fashion business and a “stable” period ahead for travel retail.

Stefanel said it is targeting 2006 sales of €930 million (US$1,177 million), representing cumulative growth of +19% for the 2004-2006 period.

Stefanel expects an EBITDA margin of 7.7% in 2006 and an EBIT margin of 4.0%, the company said in an outline of its 2004-2006 development plan.

Growth in the fashion sector – which includes the Stefanel business unit, Interfashion and Hallhuber – will be achieved by expanding the store network in Italy and internationally, by raising sales per square metre and by improving collections and the product mix, with a higher proportion of accessories.

Stefanel added that it expects the current Nuance business portfolio to remain stable because no major concession is up for renewal in the coming years. But it added that the Nuance Group will “undoubtedly make every effort to take advantage of any growth opportunities offered by the market.”

In Stefanel’s third quarter results for the period ended 30 November 2003, The Nuance Group registered sales of €152.3 million (US$193 million) and EBITDA up +6.6% at €10 million (US$13 million).

Cumulatively, Nuance sales in the first three quarters of the current financial year were down -0.6% at €423.9 million (US$536.6 million) and EBITDA was up +4.6% to €19.5 million (US$24.7 million). The sales split by region was EU (excluding Italy) 32.5%, Italy 0.6%, other Europe 19.5%, Far East 4.5%, North America 11.8%, other (including Australia) 31.1%.

Nuance is a joint venture owned 50:50 by Stefanel and another Italian retailing group GECOS/Gruppo PAM . Its results are consolidated via the equity held by the two groups.

Over the 2004-2006 period, Stefanel plans €60 million (US$78 million) in capital expenditure, of which about 50% will go to the travel retail business of Nuance. Net debt is expected to fall “considerably” during the period from the €200.9 million (US$254 million) reached on 30 November, Stefanel said. The group’s gearing (fixed interest debt to equity ratio) is “expected to be no higher than 1.0,” it added.

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