Despite prospects of a strong global economy, companies in the European apparel and retail sectors are navigating challenging business periods. In the long term, though, several companies are offering bullish views for top- and bottom-line growth.
Two weeks ago, IT Holding SpA executives raised its financial targets even as sales are expected to drop 8 percent this year. WWD reported that the decline was due to the loss of the firm’s D&G line from Dolce & Gabbana.
However, management remained bullish on revenue growth over the next few years, saying a focus on accessories and store openings will bolster results. The company is also banking on sales growth via emerging markets such as the Middle East.
WWD also reported that the death of Gianfranco Ferre will not deter IT Holding’s growth plans for the fashion house. Management is expecting the fashion house to double sales by 2010.
Separately, Escada said restructuring costs would have a negative impact on full-year results. WWD reported that the Munich-based company issued the profit warning as it reported profits of 9.3 million euros, or $12.2 million, in the first half, which compares to a 3 million euros, or $3.6 million, loss in the same period last year.
Analysts, generally, have praised companies for taking on restructurings sooner than later as cost of sales are expected to rise across all business sectors. Still, the broad, global outlook is bright.
A recent report from the Bank for International Settlements forecast “robust” economic expansion in China and India. The report also forecast growing demand for U.S. imports.
The report anticipates real economic growth to expand 4.3 percent in 2007, which compares with 4.8 percent gain in 2006.
However, WWD reported that the BIS analysts “believe there are a number of near-term risks. Specifically, the analysts pointed to global inflationary pressures, structural imbalances and the impact of the downturn in the U.S. housing market.”
For a detailed look at the stories behind the headlines, see the following archived articles:
IT Holding Execs Forecast Growth
Escada Warns of Full-Year Loss
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