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MILAN — The “Valentino effect” is gaining speed.
This story first appeared in the March 17, 2014 issue of WWD. Subscribe Today.
In an interview to discuss the brand’s gains in profitability and revenues in 2013, chief executive officer Stefano Sassi touted the company’s upward trajectory and current standing in the luxury arena, projecting further growth and pointing to 2014 as a key year, marked by the opening of high-profile flagships in New York, Rome and Hong Kong. “These three boutiques will be the most important in terms of visibility, investment and size,” said Sassi.
Boosted by growth in all its main markets and gains at both its ready-to-wear and, in particular, its accessories division, Valentino SpA in 2013 almost doubled earnings before interest, taxes, depreciation and amortization to 65 million euros, or $85.8 million, compared with 34 million euros, or $43.5 million, in the previous year. Operating profit rose to 36 million euros, or $47.5 million, compared with 15 million euros, or $19.2 million, in 2012. Net profits were not revealed.
Revenues climbed 25 percent to 488 million euros, or $644.1 million. This compares with sales of 391 million euros, or $500.5 million in the previous year. Global retail like-for-like sales at current exchange last year were up between 35 and 40 percent.
Dollar amounts have been converted at average exchange for the periods to which they refer.
Looking at 2014, Sassi said he “would not want to go below another 25 percent growth.” The executive said that globally, in January and February year, retail sales grew 30 percent.
“The fundamentals for luxury are good in the medium-long term and growth may generally be smaller but continuous,” he remarked. Unlike some of Valentino’s competitors, the house is not seeing a slowdown in China, perhaps helped by the fact that “other brands are already very much exposed” in the region, conceded Sassi. Europe, including Italy, is Valentino’s main market, representing 40 percent of sales, and last year it showed 25 percent growth. “We are seeing a pickup in domestic sales, as well, which makes us very happy,” he said, adding that last year Italy performed well, although 60 percent of purchases in the country were made by foreigners. Sassi downplayed any effect of the crisis in Ukraine and Crimea. “We are not feeling it,” he said.
In 2013, sales in the U.S. climbed 21 percent. In the Asia-Pacific region, they soared 70 percent. Discussing the group’s strategy, Sassi said it’s “not about conquering new markets but about increasing penetration in those where we are already present.” Accordingly, the focus will continue to be on the U.S., Europe and Asia.
Fueled by the spending power of Valentino’s owner Mayhoola for Investments, an investment vehicle backed by a private investor group from Qatar, the house last year spent 100 million euros, or $132 million. In 2014, between 120 and 140 million euros, or $159 and $185 million, are earmarked for investments. Sassi said “90 percent” of the investments have been and will be directed to the company’s own retailing.
That said, Sassi underscored that Valentino’s retail strategy is “not about filling the world with stores or occupying locations that were not covered. The product offer is more important.” The company is looking at selecting locations that are “very visible,” and that express the “quality of the project,” highlighting the “importance and relevance” of the brand. Developing a blueprint by architect David Chipperfield, each boutique is “improved and evolved, so that each fits with and is representative of each city.”
The openings on New York’s Fifth Avenue, in Rome’s Piazza Mignanelli overlooking the Spanish Steps, and on Hong Kong’s Canton Road are all set to take place in the second half of 2014. “We want to hold an event to support the opening of one of these locations, but we are still evaluating the format and the venue,” said Sassi, adding that it will have “the same relevance” as the fashion show held in November in Shanghai to mark the opening of a 7,535-square-foot flagship in luxury mall IAPM. For the occasion, for the first time Valentino introduced a new collection — an all-red line in homage to China — outside of Paris.
Sassi flipped through photos and sketches of the windows in Shanghai, the recently completed San Francisco boutique and New York’s Fifth Avenue, where the company entirely redesigned the facade of the 20-year-old Takashimaya Building. Sassi pointed to the “timelessness” of Chipperfield’s designs for the new stores. He proudly added he felt Valentino is “closing a gap” with the brand’s competitors, accelerating its development over the past two years. Modeled after its stores, Valentino has also expanded and redesigned the Milan showroom, which now covers 16,200 square feet and was unveiled in January.
The company currently counts 160 boutiques globally.
Asked to address the relationship with Mayhoola for Investments, which took control of parent company Valentino Fashion Group SpA in July 2012, Sassi reiterated it was “very good.” He elaborated by saying that “they are excellent shareholders that have helped accelerate the development of Valentino on a path that had been defined. They were very intelligent, they bought the group at the right moment, supporting the project.”
In February, Mayhoola for Investments acquired a majority stake in Forall Confezioni SpA, which produces Pal Zileri and also holds licenses for Moschino and Cerruti 1881. Addressing a question about a possible synergy in men’s wear, Sassi demurred, unaware of this possibility for the time being. In his opinion, Valentino is focused on a “more lifestyle” men’s wear brand, or “sophisticated casualwear” and less formal than Forall’s production.
Men’s wear has achieved “a good level of maturity,” he said, adding creative directors Maria Grazia Chiuri and Pierpaolo Piccioli have set the “foundations to accelerate” the division, which accounts for between 7 and 8 percent of total sales. A dedicated men’s store opened in Paris last January.
Sassi was pleased with the performance of the handbags and shoes category last year, which accounted for 43 percent of sales compared with 33 percent in 2012. Praising the designers’ talent and ongoing search for quality, couturelike craftsmanship and modern take on designs, Sassi said rtw is increasingly “more effective and competitive,” as Chiuri and Piccioli offer a more comprehensive lineup that includes more daywear and sophisticated casual looks, “opening to categories that previously did not exist [for the brand], such as shirts and T-shirts or jeans. It’s a winning message of freshness and coolness plus exclusivity.”