Cavalli Swings to Profit in First Half

Italian firm cites growth in retail and wholesale.

MILAN — Roberto Cavalli returned to the black in the first half — the better to celebrate the company’s 40th anniversary this year.

This story first appeared in the September 7, 2010 issue of WWD.  Subscribe Today.

In the six months ended June 30, the Roberto Cavalli Group reported a net profit of 1.9 million euros, or $2.5 million, compared with a loss of 3.5 million euros, or $4.6 million, a year earlier. Revenues in the first six months of the year slipped 1.7 percent to 86.2 million euros, or $114.6 million, from 87.7 million euros, or $116.6 million, at the end of June last year.

Dollar figures were converted at average exchange rates for the periods to which they refer.

Gianluca Brozzetti, chief executive officer of the group, told WWD that both wholesale and retail sales grew in the first half, compensating for a drop in royalties from its Just Cavalli licensee Ittierre SpA, which has been in government-backed bankruptcy protection since February 2009. In particular, sales in directly owned stores jumped 27 percent in the first half this year. Brozzetti, who joined the company in September 2009, also said “careful restructuring and cost control” helped lift the bottom line.

Earnings before interest, taxes, depreciation and amortization totaled 12.1 million euros, or $16 million, compared with 12.9 million euros, or $17.1 million, in the same period last year.

Looking at the second half, Brozzetti said he remains “with his feet firmly planted on the ground,” and “cautious” given the general uncertain economy, high unemployment rates, real estate troubles, and the rate at which companies are shutting down. However, the executive noted that “retailers have completed their destocking,” and said that business has picked up in the first half. In addition, he said marketing and advertising activities, special-edition products and celebrations put in motion to mark the anniversary have already yielded an economic return and will continue to do so in the second half.

“We have already sold-through our pre-collections for fall,” Brozzetti said.

At the end of June 2010, the group’s short-term debt totaled 6.7 million euros, or $8.9 million, compared with 8.3 million euros, or $11 million, as of Dec. 31, 2009. A company spokeswoman said the debt at the end of the first half could not be compared to the same period last year because “the parameters of consolidation” have changed.