The results posted for the 2nd quarter and the 1st half of 2006 indicated that Marcolin may well be about to come out of the tunnel it got dragged into when it lost the Dolce & Gabbana brands out to Luxottica, with a short transition period until Dec. 31 2005. Though there will still be no profit at the end of this year, the group is expecting a big improvement in the 2nd half, as its sales of the D&G lines were already down to a bare minimum in the corresponding period of last year.

The latest results reflect a transition from an era in which the D&G collections were its core business, particularly for the European market, to a new period revolving around several new brands, including Tom Ford and Just Cavalli. The newest addition is going to be a line of glasses named after Roger Vivier, a famous French shoe designer now dead who worked closely with Yves Saint Laurent and other important fashion designers. One of the first prototypes was worn by Scarlett Johanson at the recent film festival in Venice.

Marcolin's new Roger Vivier line will be sold exclusively this Fall in the three existing Roger Vivier stores in Paris, Hong Kong and London, as well as its new flagship opening in New York in December, but the distribution will be widened to selected multi-brand stores later on. Diego Della Valle and his brother, who recently acquired a major stake in Marcolin, bought the rights to the Roger Vivier line in 2002.

To compensate for the loss of D&G, the Italian group has made huge efforts on the production and sales fronts that have affected its profitability, in spite of strong growth in turnover for the other brands in its portfolio. With total revenues down by 6.2 percent to €82.69 million for the first six months of this year, operating profit for the period before amortization and depreciation (EBITDA) fell from 6.7 percent to 4.4 percent of revenues, declining to €3,599,000. After amortization and depreciation, the group's operating margin (EBIT) fell from 1.4 to 0.2 percent of turnover, while the net loss increased from €2,089,000 to €3,677,000.

There was, however, a turnaround in the 2nd quarter. While revenues fell by a further 8 percent in the quarter, as compared to the same period one year ago, falling to €41.85 million, operating profit before amortization (EBITDA) increased by 31.5 percent to €2.2 million, rising from 3.7 to 5.3 percent of turnover. Operating results after amortization and depreciation (EBIT) switched from a €1,217,000 loss in the 2nd quarter of 2005 to a €924,000 profit in the latest period. The €1,755,000 net loss posted for the quarter was a 16.9 percent improvement year on year.

The turnaround occurred faster in the USA, where the company recorded an operating profit (EBITDA) of €616,000 for the full 6-month period, against an operating loss of €930,000 in the 1st half of 2005. Instead the group's French sports eyewear subsidiary, Cébé, increased its EBTDA loss by 22.7 percent to €2,539,000. Marcolin puts this down to the reorganization of Cébé, which is still underway, and to the devaluation of its inventories following the introduction of new models. Cébé's revenues were up by a modest 1 percent thanks to an 18.1 percent increase in sales of ski goggles, which grew to €2.4 million.

The development of Marcolin's revenues indicates that it is on the right track. Excluding Dolce & Gabbana, which was still a major factor in the 1st half of 2005, the group's revenues actually grew by a full 42 percent in the 1st half of this year. The rate of increase reached 110 percent for its new brands, which all reached the previously set sales targets. The remainder of the group's existing portfolio scored very well, too, with Roberto Cavalli up by 95 percent, Montblanc up by 118 percent, Miss Sixty up by 53 percent, Timberland up by 35 percent and Kenneth Cole's sales up by 23 percent on the U.S. market. The sales levels reached in July and August confirm the positive trend.

In geographical terms, the loss of D&G knocked €6 million off the group's revenues in Europe during the 1st half of 2006, Italy excluded, taking them down by 16.9 percent to €29.6 million. Domestic sales grew by 3.9 percent, representing 25 percent of the total turnover, followed by the USA with 24 percent and the rest of the world with 14 percent. Marcolin's U.S. revenues were off by 1.6 percent in euros, but they were up by 2 percent in dollars.

As compared with the end of 2005, the net financial position of the group fell by €3.9 million to €41.2 million. While the group reduced its short-term debt to €37.9 million, long-term debt rose by €2.6 million to a new total of €16 million because of a credit line of €25 million granted by Banca Intesa last February, €15 million of which has already been used.

New structural improvements are still in the pipeline.