MILAN — Lackluster business in the U.S. and unpaid royalties on the Just Cavalli brand from licensee Ittierre SpA hurt Roberto Cavalli’s 2009 consolidated sales, which fell 22 percent to 174.7 million euros, or $242.8 million at average exchange.
In his first interview with WWD since his appointment as Cavalli’s chief executive officer in September, Gianluca Brozzetti said the family-owned firm is “profitable and solid,” but was penalized last year by Ittierre’s financial troubles. The Italian apparel manufacturer is Just Cavalli’s longtime licensee and has been in government-backed bankruptcy protection since February 2009, together with its parent company, IT Holding, which also controls the Gianfranco Ferré and Malo brands.
Brozzetti said a gap of 21 million euros, or $29.2 million, in unpaid royalties from Ittierre accounts for 60 percent of the 22 percent drop in sales at Cavalli. Royalties represent one-third of the company’s business. Stripped of royalties, Cavalli’s remaining revenues dropped 9 percent.
Brozzetti also attributed the shrinking sales to an “isolated” problem in the U.S., where revenues declined 27 percent. “We suffered in that market more than any other in the rest of the world,” said the executive. On the other hand, he noted the company is generally “holding up well,” with a 12 percent operating profit and short-term debt of 8 million euros, or $11.12 million. As of June 30, the group’s short-term debt stood at 21.2 million euros, or $31 million.
Designer Roberto Cavalli, who is marking the 40th anniversary of his label this year, said before the Just Cavalli show on Thursday that “in one or two seasons,” that line will be back in shape and he “will be able to be more optimistic then.” He also noted IT Holding’s three state-appointed administrators, Andrea Ciccoli, Roberto Spada and Stanislao Chimenti, “are doing a good job” at restructuring the group, which was plagued by “bad management” in the past. Cavalli said he now has more time to focus on design, given the arrival of Brozzetti, together with chief operating officer Carlo Di Biagio last year.
Looking ahead, Brozzetti said 2010 will be “a transitional year, but the worst is over.” The second half of 2009 and the beginning of this year “have been positive, but it’s still early” to define 2010.
Brozzetti underscored the potential of the Asian market and of the company’s retail network, which is “still underdeveloped” with 58 stores, compared with Cavalli’s competitors. Next week, a third boutique will be unveiled in Japan, at Osaka’s Takashimaya, which follows the opening over the past six months of stores in Las Vegas, at London’s Heathrow and with online e-tailer Yoox.
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