The designer’s reluctance to reduce the lofty valuation he places on his fashion brand has resulted in talks breaking down between Cavalli and Italian private equity firm Clessidra SGR SpA, which had been in exclusive negotiations since the start of the year about taking a stake in Roberto Cavalli SpA, WWD has learned.
Clessidra pulled out of talks to buy a 30 percent stake in Cavalli over the weekend, sources said Tuesday.
“Relations have cooled,” a person familiar with the situation said. It was not clear if they have done so permanently.
Clessidra had signed a letter of intent in June and was expected to secure a deal by the end of September. However, talks broke down after Cavalli declined to budge on his asking price or to sell a larger stake for the same price, another source said. The amount Clessidra was offering could not be learned.
A spokesman for Clessidra declined to comment Tuesday, while a Cavalli spokeswoman could not be reached for comment.
Last year, net profits at Cavalli declined to 822,922 euros, or $1.2 million, from 8.8 million euros, or $12.1 million in 2007, on sales that edged up 1 percent to 112.9 million euros, or $166.1 million. Earnings before interest, taxes, depreciation and amortization fell to 4 million euros, or $5.9 million.
The bottom line is expected to come under further pressure this year, after Cavalli forecast in May that 2009 revenues would decline by 12 to 13 percent
Dollar figures were converted at average exchange rates for the periods to which they refer.
The impasse is a case of history repeating itself as far as Cavalli is concerned and a reminder of private equity investors’ reluctance to meet the megavaluations of three or four years ago.
But a Clessidra deal seemed problematic almost from the beginning. After reaching a tentative deal with the private equity company earlier this year, in May the designer seemed to change his mind yet again. “I’m not so sure I want to sell in the end,” Cavalli told WWD at the time. “It’s more logical to buy than to sell now.”
However, a week later the fashion house and Clessidra revealed they’d signed a letter of intent for Clessidra to buy a stake. “I had to think hard about it over the last few weeks, and I believe that it is the right way to ride the recovery after this moment of international economic-financial crisis,” Cavalli told Il Sole 24 Ore.
Even that represented a change — he had initially insisted he was selling 10 to 20 percent of his firm “but no more.” In the end, Clessidra was negotiating for a 30 percent holding — and perhaps even more given Cavalli’s declining valuation.
And the breakdown in talks with Clessidra is simply the latest wrinkle in the three-year saga of Cavalli seeking an investor. The designer called off an auction in July 2008 because of market conditions, saying valuations of his business of around 800 million to 900 million euros, or $1.14 billion to $1.29 billion, fell short of his expectations and he would not revisit a sale before 2009.
Cavalli has always seen his fashion house as worth more than investors were willing to pay — at one point saying he believed his company was worth more than 2 billion euros, or $3.2 billion at current exchange. In 2006, he seemed to be close to a deal when Saudi Arabian private equity fund SAB Capital submitted a bid for 60 percent of his business — only for the 68-year-old designer to pull out of the talks.
However, after revoicing his interest in selling a chunk of the business to fund expansion, Cavalli seemed to have found the right investor in Clessidra in January, telling WWD on the sidelines of his fall-winter men’s wear show he needed a serious financial partner, that the equity firm fitted the bill as “a well-managed Italian group,” and expressing hope a deal would help grow his company.
Clessidra was also set to bring in a chief executive officer Cavalli has repeatedly said he needs. Giancarlo Di Risio, who resigned as ceo of Gianni Versace SpA in June after a spat with the Versace family, was being lined up to take the same role at Cavalli as part of the deal, sources said.
EXCLUSIVE: @tomford is opening its first-ever beauty store. The boutique, which opens November 20 in London’s Covent Gardens, was designed with the over the top glam Ford is known for. Read the full story on WWD.com, link in bio. #wwdbeauty #wwdnews (📷: Simon Wagner) #TomFordBeauty
New York-based DJ @harleyvnewton threw a party to celebrate the holiday collection of her dress and pajama line @hvn at the Ladurée Beverly Hills. It Girls @katebosworth, @rashidajones and more joined in on the fun, which included cocktails, croque monsieur sandwiches and a photo booth. #wwdfashion (📷: Owen Kolasinski/BFA.com)
For the holidays, @Burberry partnered with 20-year-old artist @blondeymccoy on a series of three outdoor murals in downtown Manhattan. The murals are McCoy’s interpretation of a Christmas eve party, the idea of charity and the spirit of family. His third mural, pictured here, is the most personal. The image depicts McCoy’s grandparents and father in London’s Trafalgar Square in the Seventies. “My work often features lots of sentimental objects.” #wwdeye
For spring 2018, designers applied bold colors and cartoonish motifs on everything from sneakers and belts to key chains. See all the top men’s accessories trends on WWD.com. #wwdtrends (📷: George Chinsee; Prop Styling by @rnasti; Market Editor: @luiscampuzano)
The @dior-sponsored @guggenheim international gala pre-party has a history of drawing cool-girl musical acts to serenade the crowd –– and last night was no exception. @haimtheband performed songs both new and old, and lured a star-studded audience with the likes of Rebecca Hall, Kate Mara, Mamoudou Athie and more. #wwdeye (📷: @lexieblacklock)
In a partnership between the @metopera and the @englishnationalopera, “Marnie” was born. The opera, with costumes sponsored by @mrporterlive, is an adaptation of the 1961 thriller by Winston Graham. Arianne Phillips, who created the costumes, is no rookie: She’s styled Madonna for her tours and created costumes for a myriad of films in the past. Read WWD’s interview with Phillips, where she talks about her inspiration for the opera’s costumes on WWD.com #wwdfashion
@barneysnyc took a different approach to their holiday windows this year. Instead of Christmas decor, Barneys tapped @thehaasbrothers to tell a story of positivity, gratitude and inclusivity via heartwarming silliness and humor. “It’s about kids and it’s about coming together and being family and loving each other,” said Simon Haas. #wwdfashion (📷: @joshuascottphoto)
Beauty influencer @kandeejohnson makes her foray into hair care with a collaboration with @ogx_beauty — making it the first time that OGX has teamed up for a product creation. The collab includes shampoos and conditioners in three scents. At 39 and a mom, Johnson is a different profile than the emerging social media stars, but is considered one of the pioneers of the digital beauty influencer world. Read WWD’s interview with her on wwd.com, including the strangest beauty product she’s ever tried #wwdbeauty