Under the terms of the he deals, Giorgio Armani S.p.A. and Ong's Como Holdings have created a new joint venture called Presidio Holdings, which will control A/X Armani Exchange, an urban, downtown label par excellence. The designer will have a 25% stake in Presidio Holdings and Ong the controlling 75%, though Armani has an option to increase his stake to 50% in November 2008.
Neither side disclosed financial terms, however, the new joint venture's three-year business plan "foresees an 85% growth in revenues from US$ 300 million projected for the year end 2005 to US$ 550 million at the end of 2008," according to a joint release.
In a statement, the Armani said that by launching his haute couture Privé couture collection in January 2005 and inking this new joint venture for A/X Armani Exchange, “we are effectively closing the circle on our unique multi-brand approach, whereby we are reaching all levels of the marketplace with carefully differentiated lifestyle fashion collections under the Armani master brand.”
The designer has been itching for years to gain more control of Armani Exchange, which initially had mixed success when first launched in 1991. Armani subsequently signed a license in 1994 with the Ong group to manufacture and distribute A/X Armani Exchange, though this deal covered only the United States, Canada, Mexico, Central and South America and the Asia / Pacific region (with the exception of Japan).
So, expect the new partnership to usher in a period or rapid expansion for the brand in existing and new markets, like Japan, China, the UK, the Middle East and Central and South America.
"Thanks to a most effective collaboration with Presidio International, Inc. over the last eleven years, A/X Armani Exchange has become one of the most dynamic collections within our Group with its own unique identity and an ever-growing base of young customers who enjoy its accessibility," Armani added.
"Fast-fashion, where production and distribution systems allow for a collection to be refreshed and replenished throughout the season, is a growing reality in our sector… In the coming years, I believe that A/X Armani Exchange has the potential to become one of the world’s strongest youth fashion brands," he added.
The new partners are planning dynamic growth in the brand's retail network, and expect the brand’s exclusive worldwide chain to double in size from its current level of 95 stores. A/X Armani Exchange will continue to be retailed only through direct mono-brand stores worldwide, the new partners stressed.
Ong said that thanks to, "Giorgio Armani's extraordinary creative vision, we have been able to build the A/X Armani Exchange brand into one of the fashion industry's most significant success stories in those countries... Now, with the new impetus of this joint venture, we have the ability to capitalise on this brand's remarkable potential worldwide, which is an opportunity our highly talented team has been eagerly awaiting."
Ong and her property tycoon husband Ong Beng Seng own two score of franchise stores and multi-brand boutiques in Singapore, plus a chain of super smart hotels including The Halkin and Metropolitan in London and the opulent Parrot Cay resort, on a 1,000-acre island in the British West Indies
Future plans also include the expansion of the A/X Armani Exchange product offering to include accessories, fragrances, eyewear and watches, which could also be sold through the brand's direct worldwide store network. Plans are in the pipeline to significantly expand into e-commerce, since Internet sales are currently only available in the US.
One measure of A/X Armani Exchange's success is that today it boasts 1,767 direct employees, i.e. more than one third the number of 4,800 of the workforce in the extended Armani empire including his Privé, signature line, Armani Collezioni, Emporio Armani, Armani Jeans, Armani Junior and Armani Casa collections.
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