Valentino SpA on Thursday revealed continued growth in the first quarter of the year and a realignment of prices in Greater China and Southeast Asia.
After surpassing the $1 billion mark last year, the Rome-based fashion house said revenues in the first quarter rose 9.4 percent to 256 million euros, or $289.3 million, compared with 234 million euros, or $255 million, in the same period last year. Earnings figures were not disclosed. As reported in March, Valentino posted a 48 percent leap in revenues in 2015, reaching sales of 987 million euros, or $1.09 billion. At the time, chief executive officer Stefano Sassi said the company expected double-digit growth to continue in 2016.
Dollar figures are converted from the euro at average exchange rates for the periods to which they refer.
In the first quarter, the impact of exchange rates was “irrelevant,” said the company, noting that all markets showed growth, with double-digit increases in the U.S. and Japan.
Valentino said that starting from April 29 it would “significantly” reduce the price gap between the European, Greater China and Southeast Asian markets. The company specified that “European prices will not change while Asian prices will be reduced. This strategy is aimed at strengthening the brand image and global quality distribution, protecting the interest of our customers and safeguarding the recent direct retail investments made by the company.”
Last year, the firm opened 30 boutiques. In 2015, retail accounted for 55 percent of revenues, and the group’s store network covered 160 units. In 2016, the company expects to open an additional 20 to 30 stores, including relocations. For example, a unit is slated to open in Tokyo’s Omotesando in the second half of the year.
In March, discussing the currency fluctuations that have impacted fashion companies, Sassi conceded they had “generated an earthquake, with benefits, but also expanded the delta from market to market. We have already done some adjustments,” adding that more steps were going to be evaluated. The Chinese have been traveling extensively in Europe, Japan and Korea. “They are intelligent and rational, they benefit from a market increasingly more open. In the long-term [prices] will be more reasonable, depending on the exchange rates,” he said at the time. Sassi was also upbeat about prospects in Japan, where Valentino “started later,” and its “very good growth rate.”
Several luxury companies have taken steps to avoid customers traveling around the world in search of best prices. A year ago, Chanel revealed it was planning to begin aligning the brand’s global pricing, resulting in a sharp increase in Europe and a big drop in Asia, as did Patek Philippe and Tag Heuer. At the time, Bruno Pavlovsky, Chanel’s president of fashion, defined the new pricing policy as a “better way to ensure the relationship we want to build with our customers.”
Last year, currency fluctuations, and in particular the euro’s devaluation, triggered stark price differentials between Asia and Europe, which also helped fuel the parallel market.
Earlier this month, commenting on Prada SpA’s 2015 financial results, chief financial officer Alessandra Cozzani also discussed pricing issues — “rebalancing” prices every month on new products and the application of a “flat spread of 10 percent for all regions.” The company is “fueling all price ranges,” she said. As for currency tailwinds, they are expected to be “neutral” in 2016, Cozzani said.