MILAN — Valentino's profits and sales may continue to be on a roll, but it isn't rushing to an initial public offering this year.“An IPO in 2017 is not on the table and we'll see what happens in 2018,” said chief executive officer Stefano Sassi. “We’ve shelved it because of market conditions. If things change, we’ll review [the project]. We are not talking about it internally at the moment.”To be sure, no firm date had ever been forecast, and Sassi last year said there was “no IPO before 2017.”Valentino doesn't have to be in a hurry. The company is controlled by the Qatar-based Mayhoola Group, which is not eyeing an exit from its investment, first made in 2012. On the contrary, Mayhoola “has [Valentino] and wants to keep it, with ambitious plans to do even more,” said Sassi, alluding to the expansion of the fund’s fashion and luxury stable with the acquisition of the Balmain brand last year.In his 11th year helming Valentino, Sassi underscored the still-untapped potential for the brand, which, he said, has “been growing in a healthy way.”In 2016, earnings before interest, taxes, depreciation and amortization rose 14.3 percent to 206 million euros, or $226.6 million, from 180.2 million euros, or $200 million, in 2015.Operating income climbed 16.6 percent to 133 million euros, or $146.3 million, from 114 million euros, or $126.5 million, in the previous year.Revenues in 2016 were up 13 percent to 1.10 billion euros, or $1.21 billion, compared with 987 million euros, or $1.09 billion, in 2015. Dollar figures were converted from the euro at average exchange rates for the periods in question.Last year marked the appointment of Pierpaolo Piccioli as sole creative director of Valentino, following the exit of Maria Grazia Chiuri, who joined Dior. Sassi underscored the “significant effort” of the recent five shows in five months, expressing “great satisfaction, proving Pierpaolo’s very strong creative leadership and the correct stylistic statement — that of an evolving Valentino.”As reported, the company will once again show its pre-collection in New York. The event will be held on May 23. Pre-collections account for 70 percent of Valentino’s business, said Sassi. The shows are a strong element of communication that allow Piccioli to express his point of view and, for that reason, Sassi waved away the option of combining the men’s and women’s collections in one show per season. “Last year emphasized how there are no longer any dogmas, each brand has its own strategy.”Sassi emphasized the “ongoing evolution” of the brand under Piccioli. “The past is behind us, there is a good team in place and there is great positivity. The brand is strongly recognizable and has been carefully distributed. We’ve never aimed at growth at all costs.” Sassi has stayed clear of overexposure of the brand, which “does not pay.”While it reached the $1 billion milestone last year, Sassi said Valentino’s goal is to focus on its core business and a “very high, strong and clear positioning. This is not a snobbish attitude, but an emphasis on quality.”He said it was difficult to provide estimates for 2017, although the year has started on a positive note. Revenue of 1.2 billion euros, or $1.32 billion, is “a reasonable target” for 2017, he added. “There are all the elements in place to support further growth this year,” said Sassi.The company last year started investing in Japan and will continue to do so in 2017. “We had been making fewer investments in the region compared to our competitors,” he said. Following the opening last summer of a store in Tokyo’s Omotesando district, a 10,800-square-foot unit will open in a month in the new Ginza Six shopping landmark.“With these two important locations we make a strong statement in Japan,” observed Sassi, who lamented how challenging it was to find the right space in the Ginza area. He also admitted the company was “thinking” about holding a show in Japan later in the year.The store concept of the Ginza venue will be an evolution of the blueprint conceived by David Chipperfield with Piccioli and Chiuri. “We adapt and experiment in each location, there is no definite model, but that concept is working very well,” explained Sassi.The American market remains the main business area for the company, accounting for between 20 and 22 percent of sales.There are 175 stores globally and Sassi characterized the expansion of the brand’s retail network as “cautious.” The company has earmarked between 7 and 8 percent of sales for investments in 2017 and plans to open 20 stores this year, including some men’s units.Sassi underscored the growing relevance of its men’s wear division, which now accounts for 15 percent of total sales.Retail sales in 2016 represented 55 percent of total revenues, unchanged from 2015. Sassi has been focused on upgrading Valentino’s wholesale channel with dedicated spaces and increasing concession agreements.Aware of the “obsession” with all things digital, Valentino has been actively working to improve customer service and has renewed its partnership with the Yoox Net-a-porter Group to develop omnichannel tools “as much as possible.”“The digital phenomenon has accelerated changes, and there is more attention to spending, customers look for opportunities on the web and compare prices,” said Sassi, noting that Valentino has also seen important online business with partners including Neiman Marcus and Mytheresa.com, for example. In every case, substantial efforts have been made to control the product and the quality of the service, he said. He also pointed to applications in Valentino stores that allow for interaction with customers.A main effort last year was to realign prices globally. Sassi admitted the company had seen the effects of the Brexit vote in the U.K., which showed strong growth compared to France, for example.Last year “was very much influenced by the flow of tourists, and the exchange rates, so the Chinese traveled less, and the dollar appreciation versus the euro impacted the U.S.”He said Macao and Hong Kong were “complicated,” and Japan was lifted by domestic sales. “We did not see a growth of the Chinese in Japan.” He was upbeat, saying that the flows adjust each year.Asked whether the issue of a potential increase in U.S. custom taxes has been discussed, Sassi was practical. “We’ll tackle that if and when that will happen.”Accessories at Valentino continue to account for 50 percent of sales. Asked if there could be synergies with Balmain, for example, Sassi admitted that brand does not have a big accessories business, and that Valentino “has skills and tools to help grow the smaller companies” in the Mayhoola Group.Valentino employs around 3,300 people.
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