Aeffe Faces Challenges Amid Luxury Market Slowdown
MILAN — Aeffe’s executive chairman, Massimo Ferretti, is taking decisive steps in response to the recent global economic downturn affecting the luxury sector, which has impacted both revenues and profitability for the fashion group during the first half of the year.
Strategic Board Appointment for Growth
To bolster Aeffe’s long-term growth strategies, Ferretti announced the appointment of former Ferragamo CEO Marco Gobbetti to the board. This move aims to strengthen the group and explore potential strategic partnerships. Additionally, Ferretti laid out plans to streamline operations and reduce costs, focusing on enhancing service provision, starting in the first half and extending through a detailed 2026-2028 strategy.
Market Reaction and Financial Performance
Despite these initiatives, investor reaction has been lukewarm. Aeffe’s shares fell by 3.8 percent, dropping to 44 euros by mid-afternoon, highlighting investor concerns regarding the company’s ability to navigate current market challenges.
Crisis in the Luxury Sector
Ferretti acknowledged the severity of the situation, stating, “It is now clear to everyone that we are experiencing a serious crisis in the fashion and luxury sector.” He attributed the difficulties to ongoing global political instability and conflicts, which significantly impact the economy. “The year 2025 will be a transitional period as we strive for recovery, particularly for the Moschino brand,” he added.
Declining Revenues and Losses
Aeffe reported a staggering 27.8 percent decline in revenues, totaling 100 million euros in the first half, compared to 138.6 million euros during the same timeframe in 2024. The company’s ongoing difficulties are underscored by net losses of 28.5 million euros, a sharp increase from 20.4 million euros the previous year.
Operational Adjustments and Future Planning
In response to these financial challenges, Aeffe is initiating a substantial cost rationalization project, expected to fully implement by 2026. The focus will be on cutting fixed, direct, and labor costs to mitigate future sales slowdowns. Ferretti elaborated on the group’s commitment to monitor market trends closely while ensuring financial sustainability through effective cash flow management.
Looking Ahead: Business Strategy 2026-2028
Aeffe is also preparing a comprehensive business plan for 2026-2028, which will outline new strategic priorities regarding sales channels and markets, as well as a reassessment of key operational processes. The arrival of Gobbetti is part of Aeffe’s strategy to invest in its management team as it navigates this turbulent period.
Sector-Wide Impact and Regional Performance
The fashion group’s performance reflects broader industry trends. Revenues in Italy plummeted 31.3 percent to 39.6 million euros, driven by a 36 percent decline in the wholesale channel. European sales dropped to 32 million euros, while significant reductions were also observed in both the Asian and American markets, showing a dire need for effective recovery strategies.
Conclusion
As Aeffe grapples with declining revenues and increased losses, the company remains committed to implementing strategic changes aimed at revitalizing its brand and ensuring financial stability. The upcoming years will be crucial for Aeffe to adapt effectively to the evolving landscape of the luxury fashion sector.
