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Stefano Sassi has high ambitions for the house of Valentino.
This story first appeared in the October 15, 2012 issue of WWD. Subscribe Today.
As chief executive officer of Valentino Fashion Group SpA, Sassi has over the past six years steered the brand back into the black, forged a successful fashion design team, streamlined the company’s structure and operations, helped restore the label’s global profile and, most recently, succeeded in the transition from its previous owners, private equity fund Permira, to new ones, Mayhoola for Investments.
The executive remains his usual understated and reserved self, looking forward to Valentino’s new chapter and relishing the challenges ahead.
Sitting in his sleek office at Valentino’s headquarters, a large photo of a glider stands out as a rare glimpse into Sassi’s personal life. Declining to take credit for any bravery in flying with no engines, he laughs, and says helming a fashion company and facing this economy are infinitely more daring.
“And now, onto the next phase. The company has grown more than 60 percent over the past three years, with annual gains of 20 percent. I believe Valentino is surely a brand that can set an ambitious target and aim to double revenues in five years,” said Sassi, who was previously ceo of Marzotto SpA and started working at Valentino in 2006.
Sales in 2012 are expected to total about 370 million euros, or $476 million at current exchange, compared with 322 million euros ($414.2 million) last year. Earnings before interest, taxes, depreciation and amortization in 2011 reached 22.1 million euros, ($28.4 million), compared with 7.5 million euros ($9.6 million) in 2010 and a loss of 9 million euros ($11.6 million)in 2009. Sassi said he expected EBITDA to reach about 30 million euros, or $38.6 million, in 2012.
“Our priority now is to bridge the gap with our competitors, in terms of visibility and quality of distribution globally, through our new retail model and store concept,” said Sassi.
In February, Valentino unveiled its latest store concept, based on a Roman palazzo, on Milan’s Via Montenapoleone, the first flagship to reflect the design aesthetics of creative directors Maria Grazia Chiuri and Pierpaolo Piccioli, who worked with architect David Chipperfield. Sassi and the designers believe the store mirrors the new course of the brand in terms of product, image and modernity and are focused on exporting it globally, through the renovation of existing stores or new units.
The new concept also has a layout that supports the expansion of the accessories category, which now accounts for between 30 and 35 percent of sales.
Sassi underscored that, since the beginning of the year, sales at the Milan flagship jumped 70 percent compared with two years ago, before the renovation.
The New York flagship is currently being refurbished and is expected to open at the end of March, and the Paris venue on Avenue Montaigne is also slated to be unveiled in early 2013.
In July, the new concept made its debut at the Hong Kong Landmark store, and on Oct. 5, a boutique in São Paulo opened via a partnership with developer JHSF at the Cidade Jardim mall.
“Our goal is to have redone 70 percent of our stores in three years,” said Sassi.
As of the end of September, there were 129 Valentino stores and 89 Red Valentino boutiques globally. Retail sales were up 27 percent year-to-date.
Sassi said business has grown in all geographic markets and that China is an obvious focus going forward. As per the plan defined before the sale to Mayhoola, the company was looking to open between 40 and 50 stores over the next three years with investments of between 30 million and 40 million euros, or $38.6 million and $51.6 million, yearly.
“We may now even accelerate this development,” he said. “Our intention is to strengthen and intensify our presence around the world, either directly or through franchises, taking control of markets that are now handled by others or entering in partnerships with operators that manage our business. This is our goal, to increasingly control the Valentino store network.”
The brand is already present in the Middle East and is expected to further develop the region, but Sassi was quick to point out that this is independent from the fact that the new owners are from Qatar.
“The Middle East is an important market, one where Valentino is very well-known,” said the executive, pointing to an agreement signed recently with the Dubai-based retailer Chalhoub Group.
The sale to Mayhoola, an investment vehicle backed by a private group from Qatar that’s understood to be controlled by the royal family of that Middle Eastern nation, took place quickly, after recurring speculation that the previous owners, Red & Black Lux Sarl, a company indirectly controlled by Permira Funds in partnership with the Marzotto family, was looking to cash out.
“It all happened very quickly, following a heightened interest in the brand from several potential buyers,” said Sassi.
(Sources in Milan say Diesel chief Renzo Rosso and the Ermenegildo Zegna group were also eyeing the label.)
Sassi praised the Mayhoola investors: “From our point of view, it’s surely very positive because we are dealing with a buyer with a long-term vision, and one that has great ambitions for the brand.”
The executive showed no concern about his own future within Valentino, claiming a “calm, happy and serene” disposition throughout the transition.
“I believe, actually, that one of the reasons the investors bought Valentino is that they found a situation that convinced them, in terms of both creativity and management, one that has carved a path for the future in a time considered quick enough. This is a value.”
Sassi has always been a staunch supporter of Chiuri and Piccioli’s evolution of the Valentino product, as they opened the brand to a new category of consumers and developed the accessories, footwear and handbags divisions.
Asked to respond to media reports concerned about the increasing number of foreign groups taking control of Italian companies, Sassi said people tend to forget Permira is an English private equity fund, “so Valentino had already left Italy, as far as ownership goes.” In any case, he underscored that “this is an Italian project, the style, the management, the suppliers, the know-how and the essence of this brand are all Italian. These are fundamental values that create employment, and they all remain Italian.
“Of course, we all agree that we would like to see a more active role of Italy at home, but we can’t dismiss foreign capital [investors] that support typical Italian companies and generate employment in Italy, emphasizing Italian know-how. Foreign investors are more than welcome. I believe the current government also views foreign capital supporting Italian businesses in a positive way. If a foreign investor respects the past of a brand, maintaining its Italian essence, and is willing to support its future, I think that for Italy, it’s only good news.”
Sassi said he likes that the new owners are “important shareholders that have a presence in many other businesses, often with dimensions surely bigger that ours, with well-defined industrial plans.”
While Permira as a private equity fund by nature had a medium-term vision, Sassi said it helped grow Valentino, despite “particular conditions,” such as the exit of the founder and a “devastating [economic] crisis.” Permira’s “understanding and strategies were always medium-to-long-term and it’s paid back.”
He said the long-term strategy of the new investors was a positive for a business that is being revitalized and expanded. The start of the journey was the brand, “unbelievably clean and credible in terms of the dreams it refers to, the messages it sends. This is a fundamental starting point, and the credit goes to those who created it.”
The company had lost ground to its competitors, he said, because “more radical decisions” in terms of design, organization and distribution needed to be made. “What we and I take credit for, just a little, is that we stayed on track, because such a change cannot be done in one or two years.”