BasicNet, the parent company of Kappa, K-Way, Superga and other brands, reported aggregate sales of €360.2 million for the first half ended June 30, down from €372.4 in the first half of last year. Aggregate licensees' sales in the period were affected by the general political instability, which negatively impacted consumption levels in various western countries, as well as currency volatility, with a number of currencies weakening against the U.S. dollar. The K-Way brand, however, posted higher sales in the period.
The group's net profit was €5.1 million compares to €9.1 million in the first half of 2015. Operating earnings before amortization (Ebitda) were down to €10 million as compared to €17.0 million. After amortization, Ebit dropped to €7.1 million from €13.9 million last year. During the first half, the company stepped up significantly its marketing and sponsorship expenses, which jumped by 53 percent to €12 million. This investment strongly impacted the period's result, while the related commercial benefits will only appear after presenting the upcoming collections, the company said.
Revenues from icensees of €257.4 million were down by 1 percent at current exchange rates, or by 0.6 percent at constant currencies, versus last year's first half. Revenues from production licensees of €102.8 million represented an 8.6 percent decrease at current exchange rates, down by 8.3 percent at constant currencies. The group's direct sales in Italy totaled €63.1 million, as compared to €63.9 million in the first half of 2015.
By brand, Kappa and Robe di Kappa posted sales of €164.3 million, in line with €164.7 in the first half of 2015. Kappa and Robe di Kappa brand revenues were impacted by slowing consumption in Europe, while in South America the weakening of the Brazilian and Argentinean currencies substantially wiped out improved volumes. In Asia, the Indian, South Korean and Vietnamese markets performed well, although also in this case results were impacted by the conversion to U.S. dollars of the respective currencies. The performance on the Middle Eastern and African markets was affected by political instability.
Superga's revenues were down to €70.1 million as compared to €74.2 million in last year's first half. Superga grew in the Americas, where the licenses for Argentina, Chile, Colombia and Panama became fully operational. In Europe, growth was recorded in Northern countries, the U.K. and Germany, while sales slowed down in Turkey and Greece. The Asian market was impacted by the interruption to the license held by the Indian licensee, due to disagreements on commercial methods, the company said, as well as the slowdown on the Chinese and Hong Kong and South Korean markets. In Italy, the restructuring of the brand's distribution channels, in favor of better brand positioning, had a negative impact on revenues.
In contrast, the K-Way brand saw sales grow, from €20.8 million in last year's first half to €22.0 million. The brand grew on the South American market, with the start of the Chilean market license. It also grew in Asia, with the Japanese license becoming fully operational and sales picking up in South Korea.
The BasicNet group had a total of 892 shops globally as of June 30, 2016, compared with 862 as of Dec. 31, 2015. The total includes 689 Kappa and Robe di Kappa mono-brand stores and shop-in-shops, of which 118 are in Italy, along with 174 Superga mono-brand stores and shop-in-shops, 74 in Italy, and 29 K-Way sales points, 24 in Italy.
The strong growth in marketing and media investments during the first half of this year, from €7.8 million in the first half of 2015 to €12 million, was due to new sponsorships and advertising campaigns. On the Italian market, the main sponsorships cover the SSC Napoli and US Sassuolo football clubs, while the main sponsorship deal on the international market is the one with Leeds United FC, in the U.K. Billboard and newspaper and magazine investment spending increased in support of the Kappa, Superga and K-Way brands. Significant funding was also allocated to communication and endorsement operations with an international impact, said the company.
