MILAN — There may be a global economic slowdown, but Valentino is stepping up the pace of its expansion.
Stefano Sassi, chairman and chief executive of the fashion brand and Valentino Fashion Group's ceo, remains bullish about the mid- to long-term growth of the brand, where he hopes to double sales over the next five years. He also sees plenty of potential for accessories, more stores and the penetration of new markets.
Sassi discussed future plans for Valentino during a meeting here in the wake of two major events at the storied fashion house last year: the takeover by private equity fund Permira in July and the announcement of Valentino's retirement.
"These two circumstances accelerated the brand's development and the idea of broadening the collections that was initially strategized under the Marzotto ownership," said Sassi, adding he and the Permira management are on the same wavelength as how to grow Valentino.
The company's current creative setup partly retraces Gucci's initial post-Tom Ford format, with Alessandra Facchinetti in charge of all women's ready-to-wear lines and couture; duo Maria Grazia Chiuri and Pier Paolo Piccioli spearheading the accessories division, and Ferruccio Pozzoni, the men's wear designer since January.
The main points on Sassi's agenda are:
l To double Valentino's 2007 consolidated sales of 261 million euros, or $381.4 million, over the next five years by posting annual sales increases of 15 percent.
l To nearly triple accessories sales — which currently total 50 million euros, or $73 million, over the same period.
l To ramp up the number of directly owned stores to over a 100 from 65 and develop a new store concept, which will be used for key flagship stores beginning at the end of the year. Expanding the retail network is a global, 30 million euro, or $44 million, undertaking, with future openings planned across Europe, the U.S. and Asia.
l To further strengthen the relationship with existing licensees to capitalize on the Valentino name and make sure watches, eyewear, bridalwear and fragrances mirror the brand's quality.
l To attract a younger, trendier consumer while not losing the brand's current clientele.In the first quarter, overall sales advanced 13 percent at current exchange rates versus last year, with a 65 percent rise in retail sales in Asia. Sassi admitted that the anemic dollar is impacting the brand's U.S. business, however. "Our American retail sales rose 16 percent in April, but the exchange rate squeezed it down to a minus 2 percent loss," he said. "We're performing well, but we aren't bringing home the results."
The U.S. accounts for 25 percent of total sales.
Valentino sits under the umbrella of Valentino Fashion Group, a 2.1 billion euro, or $3 billion, company that also owns a majority of men's wear giant Hugo Boss, Marlboro Classics and M Missoni.
Sassi, who fully oversees Valentino with some involvement in the other brands, said he wouldn't rule out future acquisitions by VFG, but stressed the group is currently focused on the current strategies for growing the brands, unless "a [once in a] lifetime occasion comes up."
He added that a replacement for Bruno Salzer, Hugo Boss' long-standing ceo who left in February due to differences with Permira's management, could be named in the near future.
Sassi also acknowledged that, in many ways, VFG has benefited from not being a public company any longer, having been delisted from Milan Bourse after Permira's takeover. This has enabled it to focus on growth strategies without concerns about the share price.
Facchinetti was hired in September to replace Valentino and unveiled her first collection in February in Paris. She maintained Valentino's bread-and-butter staples and iconic elements while injecting a younger spirit into the line. Her inaugural effort was generally well received by retailers and fashion critics, although the feeling was she needs to accelerate the move toward a trendier collection to capture a new customer.
"When Valentino was still around, everything was done to support the designer and his needs, and now we're doing the same for the current design team and their new vision," said Sassi.
And he believes Facchinetti's efforts to refreshen and update the collection is spot on. "The only way to woo a trendier and more price-conscious clientele is with younger looks with more accessible price points," he said.Sales of the fall collection rose 50 percent compared to last year, with the U.S. being an especially strong market for the designers' accessories, which Sassi said are "much more expensive than Gucci and Prada's."
Proving the brand's heritage remains vital, Sassi firmly denied any intention of shuttering the couture business. "The Roman atelier is unique, one that few competitors boast," said Sassi.
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