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Valentino Eyes Growth in Asia

MILAN -- After three weeks actively in the driver's seat at Valentino, Marzotto organized a press conference on Saturday to outline projects for the fashion house it purchased from Holding di Partecipazioni at the end of March. They include...

MILAN — After three weeks actively in the driver’s seat at Valentino, Marzotto organized a press conference on Saturday to outline projects for the fashion house it purchased from Holding di Partecipazioni at the end of March. They include expansion of Valentino’s retail network and accessories business.

“We want to maintain the [Valentino] label in the luxury segment of the market — high, high up with five or six other labels,” said Michele Norsa, general manager of Marzotto’s apparel division and Valentino’s chief executive officer.

Norsa also trumpeted Valentino’s retail network, which he termed an “enormous asset.”

“There are only 18 Valentino boutiques in the world, but they are in the best locations and on the best streets,” Norsa maintained. Those stores registered growth of 23 percent for five months ended May 31, versus the prior year period, said Fabio Giombini, Valentino’s general manager.

Valentino will open a boutique in Las Vegas in November and six units in 2003: three in Asia, two in Europe and one in the U.S., Giombini noted.

It is no accident that half the Valentino stores planned for next year will bow in Asia: Norsa said Valentino plans to further control the continent, which now accounts for about 15 percent of its sales, through majority-owned joint ventures.

Valentino’s business in China is rising at a 7 percent rate annually, according to Norsa, who predicted it will soon be a leading market in Asia. The label’s business in Russia is increasing as well, but Norsa acknowledged the market was more “risky.”

Growth also is in the offing at Valentino’s accessories division, which currently contributes 20 percent of the label’s sales and which Norsa aims to extend to 30 percent in the next two years. To that end, the company plans to create an accessories production unit in Tuscany.

Norsa and Antonio Favrin, vice president and chief executive officer of Marzotto, said they expect profitability for Valentino in 2004, while 2003 will remain a transition year that requires further investments in the house. “We are cautious for 2002, but we expect a growth in sales of no less than 5 percent,” said Favrin. That would put volume for the full year at a minimum of $121 million. In 2001, Valentino registered sales of $115.7 million, resulting in a gross margin of $72.3 million and a net loss of $24.9 million.

Norsa noted Valentino’s sales were “balanced” around the world. Italy and the rest of Europe each account for 30 percent of volume, and the U.S., 25 percent, with the rest of the world contributing the remainder. “We firmly believe in the U.S. market, notwithstanding the uncertainties” connected to last year’s terrorist attacks, said Norsa. “It’s a key market, and no label is big if it isn’t strong in the U.S.”.

Norsa said he planned to invest in marketing through special events and said he wanted to make “good use” of the appeal the Valentino brand has with celebrities and royalties. “The return from a celebrity wearing a Valentino dress is invaluable,” said Norsa.

The contract with the designer himself, Valentino Garavani, expires in nine months and has been the source of endless speculation — especially given the alleged multi-million dollar fringe benefits HdP offered Valentino and his partner Giancarlo Giammetti. “I always wondered why these benefits or the financial details were so interesting to the press, when the same situation often applies to a number of soccer players and designers,” Norsa maintained.

The Valentino chief executive further said he was “struck by the love and passion” Valentino had for his work and added he “hoped the relationship [between Marzotto and Valentino] will continue.” Still, Norsa noted the contract will be re-evaluated “as any other contract would be.” HdP bought Valentino in 1998 for $210 million, a sum that included the firm’s net debt of $179.2 million.”