It's been a difficult time for luxury brands in Russia, who have had to contend with an uncertain economic and geopolitical climate, abetted by a slump in oil prices and trade sanctions imposed by Western countries late last year. On Wednesday, Aeffe SpA — the Italian parent company of brands including Alberta Feretti, Moschino and Pollini — revealed just how difficult things have been: Sales in the region fell 53 percent to €2.4 million (about $2.7 million) between the first quarter of 2015 and the same period a year prior.
A buyer for one of Russia's largest department stores, Tsum, noted in April that some Italian luxury brands have lowered prices in the region, taking a short-term hit on margins in hopes of retaining business in the long-term.
A year ago, Russia was Aeffe's third biggest market outside of Italy and the rest of Europe; it is now fourth behind the U.S., which brought in €5.2 million ($5.9 million) in sales in the first three months of the year, up 25 percent year-over-year at constant exchange rates. Aeffe saw the most growth in Greater China, up 68 percent for the quarter, though the company did not break out total sales for the region.
Despite the Russia Problem, Aeffe is having a solid start to the year. Consolidated revenues amounted to €71.2 million ($81.1 million), up 3.5 percent at constant exchange rates year-over-year. Net profits were up, too, to the tune of €5.2 million ($5.9 million) — an increase of 47 percent.
Although Aeffe did not break out individual brand performance this quarter, the company noted that footwear and leather goods sales were up 24 percent to €24.5 million ($27.9 million). Ready-to-wear grew more modestly, up 2.5 percent to €55.2 million ($62.9 million) at constant exchange rates.
In a statement, Aeffe Executive Chairman Massimo Ferretti said the company is looking forward to a strong rest of the year, "supported by a 7 percent increase in the orders backlog for the next Autumn/Winter collections."