Valentino Hurts Marzotto, De Rigo Sees Sales Drop

Losses from the recently acquired Valentino fashion house, coupled with a high tax rate, caused Marzotto to post a net loss in the first half.

MILAN — Marzotto is getting acquainted with Valentino’s trademark red in more ways than one.

This story first appeared in the August 1, 2003 issue of WWD.  Subscribe Today.

Losses from the recently acquired fashion house, coupled with a exceptionally high tax rate, caused Marzotto to post a net loss for the first half of 2003.

Meanwhile, the company warned that net profit for the full year should drop sharply, suffering from both a higher tax rate and the absence of capital gains that boosted 2002 results.

Marzotto reported a net loss of $10.2 million for the six months ended June 30, compared with a profit of $2.3 million in the first six months of 2002. Dollar figures have been converted from the euro at current exchange as Marzotto reported a loss of 9 million euros versus a profit of 2 million euros in last year’s first half.

The company did not break down second-quarter figures, but subtracting results from the first three months of the year shows that the second-quarter loss widened to $27.8 million, or 24.5 million euros, from a loss of $23.3 million the year before.

Sales for the first half rose 4.3 percent to $984.8 million, or 868 million euros, from $944 million, or 832 million euros, the year before. Marzotto said sales benefited from the consolidation of Valentino, purchased last spring. Sales in the clothing sector rose 5 percent while those in the textile sector grew by 4 percent.

Marzotto has said Valentino is on track to break even in 2004. A spokesman noted Thursday that Valentino’s earnings before interest and taxes during the first half improved by more than $11.4 million, or 10 million euros

Consolidated operating profit in the six months climbed 16 percent to $51.1 million, or 45 million euros, from $44.3 million, or 39 million euros, the year before.

In a statement, the company attributed the improvement to “the clothing sector’s good results and the encouraging recovery of the textile sector.”

A spokesman added later that Marzotto’s textile operations, a struggling part of the business that is undergoing restructuring efforts, managed an improvement of about $11.4 million, or 10 million euros, in EBIT during the first half.

Also on Thursday, De Rigo reported that a strong euro contributed to a slight contraction in its half-year sales.

The Italian eyewear manufacturer said sales dipped 0.3 percent to $307.1 million, or 273.4 million euros, for the period ending June 30.

Dollar figures have been converted from the euro at current exchange. At constant currency rates, sales would have risen 4.6 percent to $322.1 million.

Wholesale revenues dropped 5.1 percent to $89.7 million, or 79.9 million euros, while retail sales slipped 1.5 percent to $205.1 million, or 182.6 million euros.

Meanwhile, sales at its recently terminated joint venture with Prada, EID or International Eyewear Distributor, jumped 32 percent to $22.3 million from $16.9 million in the same period last year. As reported, De Rigo sold its 51 percent stake in EID to Prada for $9.4 million, or 8.4 million euros, earlier this month. Prada subsequently sold 100 percent of EID to Luxottica for $30.4 million, or 26.5 million euros.