Armani: “Non-Ostentatious Elegance” Fueled 39 Percent China Growth

Milan Label Evades Slowdown Woes After Year Of Expansion

Last year's Armani Runway Show in Beijing. (Women's Wear Daily)

Last year’s Armani runway show in Beijing. (Women’s Wear Daily)

Providing further evidence that some companies have not been hit by China’s luxury slowdown as hard as others,  Armani just reported 39 percent profit gains in the country, giving a boost to its overall 20 percent profit growth. Faring better than some labels in China as retail growth declines, the company will be one to watch to see if its China strategies can keep it in good shape for 2013.

The year 2012 was one of expansion for the company in China, with a plan focusing on second, third, and fourth-tier inland cities, the debut of its e-commerce platform, and rising demand for affordable luxury. This strategy has paid off, as lower-tier cities are expected to see faster growth than those in the first tier and e-commerce takes off at lightning speed. The company plans to open 80 to 100 stores in mainland China within the next three years, and is expanding locations for its watch and jewelry diffusion line Emporio Armani as affordable luxury demand rises.

Giorgio Armani recognized the rise of “stealth wealth” in China early, telling Women’s Wear Daily last year that his China growth was due to “the idea of a non-ostentatious elegance that speaks in a direct and clear way to the sensibility of the Chinese public.”

The label is also focused on procuring associations with Chinese celebrities. Last May, it celebrated a decade in the country with a star-studded Beijing runway show attended by film stars Fan Bingbing and Michelle Yeoh that was heavily promoted with a social media campaign.

The company’s China growth rate, while highly successful compared with many other companies in the region, was not immune to the slowdown, as its growth slowed from last year’s impressive 45 percent.

As declining growth becomes more prevalent in 2013, the real question will be how companies which have henceforth kept high growth numbers fare in the coming months. Armani did not publish specific numbers for its first-quarter earnings, but rather referred to the growth numbers as “positive.”

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