In the 12 months ended Dec. 31, net profit totaled 32.7 million euros, or $36.3 million. This compares with a loss of 9.7 million euros, or $13 million, in 2014. The sale of the building housing the brand’s flagship in Paris’ Rue Saint-Honoré helped lift the company’s profits, as well as its net financial position. The company is renting the space where the store continues to stand.
In 2015, earnings before interest, taxes, depreciation and amortization were a loss of 1.6 million euros, or $1.7 million, normalized and including the nonrecurring costs of the reorganization in 2015. In 2014, EBITDA totaled 14.4 million euros, or $19.1 million.
Last year, revenues were down 14.2 percent to 179.7 million euros, or $199.4 million, compared with 2014.
The company attributed the drop mainly to a decrease in orders predating Clessidra’s acquisition and to the challenges in luxury markets, especially Russia, where the Cavalli brand has been historically strong, as well as a contraction in sales derived from licenses. In particular, changes at the diffusion line Cavalli Class reduced sales by about eight million euros, or $8.8 million. The Cavalli Class clothing and accessories license went from the Italian firm Dressing, which in 2014 filed for a petition for a composition with creditors, to the Verona, Italy-based Swinger International. The first collections under the new six-year license bowed for spring 2015. Sales from licenses decreased 17.1 percent, totaling 53.7 million euros, or $59.6 million.
Dollar figures were converted from the euro at average exchange rates for the periods in question.
Chief executive officer Renato Semerari told WWD that the company has been engaged in its “Fix and Prepare” phase, initiated last summer and expected to last 24 to 36 months. “First we approached the style and the generational change,” he said. Peter Dundas was appointed creative director of the brand last year, succeeding the namesake founder of the firm.
The second step was to create a management structure, “which is having a relevant impact,” said Semerari, pointing to new personnel in merchandising, for example. The executive revealed that, in January, the company tapped Robert Norton as ceo of its U.S. division and Yuki Imamura as Asia president based in Hong Kong. Semerari underscored that it’s “not a matter of number of employees, but of focus, with the addition of highly skilled professionals and leaders, without impacting costs and headcount.”
Semerari reiterated that the company’s priority remains women’s ready-to-wear, its core category, avoiding the trap of approaching all divisions at once. With Dundas, Cavalli is working on expanding its daywear category, while “confirming its historical strength in eveningwear.” Harking to its denim roots, the company is also “re-creating a luxury denim” component as part of the signature line. Footwear and handbags are important, too, but complementing the fashion for the time being, Semerari explained.
Asked to comment on the evolution of the collection from Dundas’ tepidly received women’s debut in September to his more successful collection in February, Semerari said last year “there was the desire to underscore the change. It was an important message, aiming for a younger customer and more ready-to-wear for the day, but the response was varied. February’s show was much better. We’ll see what happens with the facts, but we believe that the message of a young woman, the rebalance of daywear and eveningwear has remained and we’ve strengthened the luxury component. We’ve received a positive response from press and clients alike.”
As part of this first phase, the company is further developing its wholesale channel, in particular in the U.S., “to be well-represented in terms of number, quality and perception.” The U.S. accounted for more than 30 percent of sales, said Semerari, who sees further potential in the region. At the same time, Cavalli is introducing training courses in “retail excellence,” and working on the revamp of its network of stores, which last year totaled 182, with “a fresher image.” The company has also relaunched its Web site and e-store developing an omnichannel strategy.
The company’s second phase is called “Grow” and will begin in 2018, explained Semerari. The plan is to expand the brand across markets around the world, mainly in the Asian continent also through strategic partnerships. “We are much less present than our competitors in areas such as China, Japan and Korea,” noted the executive. There will also be a marked investment in underdeveloped categories such as accessories and men’s wear. This phase will see an acceleration in the opening of stores as well as more substantial investments in communication and marketing to achieve more visibility.
Semerari said he believes the company will still be in transition in 2016, “without beautiful numbers. We don’t expect 2016 to be brilliant, it will be similar to 2015. The first half will be difficult, but we will see signs of improvement in the second half. We are investing in the medium-term.” He expects a “more important progressive growth, from 2017 onward.”
Asked about a potential initial public offering seen by chairman Francesco Trapani “in the long-term,” upon the acquisition of a 90 percent stake in the company last year, Semerari said the decision rests with the shareholders. “My team and I are focused on the business plan. Any discussion on their exit is premature and does not regard me directly. My job is clear and is to grow the brand and make it successful again,” he said.
Further addressing the issue of the licenses, Semerari pointed out that Just Cavalli, licensed to Staff International, is also going through “an important change of style.” He highlighted the company’s hospitality division and its potential, given the brand’s lifestyle connotation. The Cavalli Clubs in Milan and Dubai are performing very well, he said. “It is a sector that is potentially important, it adds visibility and prestige and contributes to the image of the brand.”
There will be a cocktail event to present the new home collection at the signature brand’s flagship in Milan’s Via Montenapoleone on April 12 during the city’s international furniture and design show, the Salone del Mobile.