The luxury fashion industry, once riding a wave of booming sales and global demand, is now condfronting a significant downturn. After years of growth, consumer appetite for high-end goods has been cooling in almost every region, taking a toll on even the most established brands.
This shift signals a critical moment of reckoning for luxury labels that were previously considered unstoppable. One notable example is the Italian fashion group Aeffe SpA, parent company to Moschino, Alberta Ferretti, Philosophy by Lorenzo Serafini and Pollini, which recently reported a disastrous quarter reflecting these broader market challenges.
Aeffe’s Troubling Q1 2025 Financial Performance
In the first quarter of 2025, Aeffe experienced a 23.2% decline in revenue, dropping to €61.7 million or about $68.6 million. The ready-to-wear segment was hit hardest, down nearly 30% to €38.7 million ($43 million), while footwear and leather goods sales dropped 18% to €27.1 million ($30.1 million).
Net losses nearly doubled compared to the previous year, rising to €10.1 million ($11.2 million). EBITDA declined from a positive €6.3 million ($7 million) to a loss of €1.5 million ($1.7 million), emphasizing the severity of the downturn.
Market-Wide Declines Across Regions
The drop in sales was widespread geographically. Italy, Aeffe’s biggest market, saw a 25% drop in sales, Europe fell by 21%, Asia and other regions by 24% and the U.S. market decreased by 18%.
Wholesale, which accounts for 70% of Aeffe’s turnover, dropped by 23%, while retail sales were down by 19%. This broad-based slump highlights the global nature of the luxury market’s current fatigue.
Executive Leadership and Strategic Response
Massimo Ferretti, the executive chairman of Aeffe, attributed the poor results to a “general global slowdown in consumption” affecting both wholesale and retail channels.
Despite the grim numbers, Ferretti was somewhat optimistic, saying the company was not caught unprepared and is focusing on leadership changes and cost control initiatives to navigate through the crisis.
Creative Direction and Brand Transformation.
Aeffe has seen significant changes in its leadership. After the untimely death of Davide Renne in early 2024, Adrian Appiolaza was appointed as creative director of Moschino.
Additionally, the house’s founder, Alberta Ferretti, stepped down and handed over the creative control to Lorenzo Serafini. These changes are part of a broader transformation aimed at revitalizing the brands amid challenging market conditions.
Divestment and Financial Maneuvers
In 2024, Aeffe sold Moschino’s cosmetics and fragrance division for €98 million ($109 million), offering a momentary financial boost.
However, with those gains behind them, the company now faces the more difficult task of rebuilding its core fashion business in a sluggish market.
Broader Luxury Market Context
The luxury industry overall is experiencing a slowdown after a post-pandemic boom. Major players like LVMH and Dior have also reported strains due to soaring prices and macroeconomic headwinds.
Consumer behavior is hifting, and the once instaiable demand for luxury goods is colling globally, forcing brands to rethink strategies and pricing.
Impact on Aeffe’s Share Performance
Following the disappointing financial results, Aeffe’s shares fell by 2.1% to 0.84 euros on the Euronext Milan market. This decline indicates that some investors are doubting that the company will be able to turn around these current negative trends and regain momentum in a tough luxury environment.
Geographic Sales Breakdown
While most regions saw significant declines, Asia and the rest of the world experienced only a slight decrease in sales, holding relatively steady at around 21.3% of Aeffe’s business.
In contrast, Italy, Europe and the U.S. markets faced sharper drops, with the U.S. sales plunging by 26.6% signaling varyiing regional resilience within the luxury sector.
Outlook and Investor Sentiment
Despite the challenges, Aeffe’s leadership remains optimistic about a potential retail market recovery in the coming months.
Howver, investors and industry watchers remain cautious, watching closely to see if this confidence can translate into sustainable turnaroud or if the company’s struggles will deepen.
A Turning Point for Luxury Fashion
The recent quarter’s results from Aeffe help to illustrate the broader challenges facing the luxury fashion industry. After years of rapid growth, the market is experiencing fatigue, with decling sales and rising losses across multiple brands and regions.
Strategic leadership changes, cost control, and brand repositioning are vital for comnpanies like Aeffe to weather this downturn and adapt to evolving consumer preferences in a more cautious global economy.
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