MILAN — After a bumpy ride last year, business at Valentino Fashion Group has picked up in the first half of 2010.
This story first appeared in the June 16, 2010 issue of WWD. Subscribe Today.
In 2009, VFG reported losses before interest, taxes, depreciation and amortization of 4.4 million euros, or $6.1 million, compared with EBITDA of 38.6 million euros, or $56.7 million, in 2008. The company posted an 8 percent decline in revenues to 464 million euros, or $645 million, from 520.9 million euros, or $765.7 million, in the previous year.
Dollar figures are converted from euros at the average exchange rates for the periods to which they refer.
In 2009, the Valentino brand had sales of 232 million euros, or $322.4 million, down 11 percent from 260.3 million euros, or $382.6 million, in 2008. Profit figures were not available.
However, the group’s retail division is expected to show a 15 percent increase in sales in the first half of the year. Wholesale revenues are expected to shoot up 25 percent. In particular, sales of ready-to-wear doubled in the U.S. market. Chief executive officer Stefano Sassi attributed the boost to an improved market, but especially to the rejuvenation of the brand set in motion by Valentino’s designers, Maria Grazia Chiuri and Pier Paolo Piccioli. “The product is younger, more contemporary, complete and desirable,” Sassi told WWD. The accessories category is also gaining market share, with sales in the first half showing 50 percent growth.
The executive was upbeat about 2010. “We are optimistic and believe we will recover what we’ve lost and return to sales figures in line with two years ago,” said Sassi.
Looking forward, Sassi said the company “still has lots of work to do,” and that parent company Red & Black Lux Sarl, the holding firm created by European private equity firm Permira and part of the Marzotto family when they bought VFG in 2007, will most likely decide to exit “in the medium-term.”
Sassi said the owners “may decide to sell the group or launch an IPO, but nobody is able to know or say anything now. We still have a few years, maybe four or five, to further enhance the group,” he concluded.
In February, sources indicated that Permira had already started to put out feelers, and several investment funds were said to have looked at Valentino and Proenza Schouler, of which VFG has a 45 percent stake. While sources indicate the door appears to be open for the right offer for Valentino, Paolo Colonna, president of Permira Associati SpA, said in March the private equity fund is not planning to sell the brand at the moment — although he didn’t elaborate on a possible sale of the group’s stake in Proenza Schouler. VFG also controls men’s wear brand Lebole, and holds licensing deals for M Missoni and Marlboro Classics. It is understood Permira may be willing to retain its interest in Hugo Boss. Red & Black Lux has a 100 percent stake in Valentino and a 70 percent share in Hugo Boss.
In December, shareholders of Red & Black Lux Sarl committed to repurchase part of VFG’s debt from Citigroup. As a result, VFG’s debt was cut by one-third to about 1.5 billion euros, or $2.09 billion. Another 100 million euros, or $139 million, was then earmarked for Valentino’s future expansion. Also in December, Red & Black Lux reorganized the group’s structure, separating ownership of VFG, Valentino and its licensing arm from the Hugo Boss business.