MILAN — The underperforming Just Cavalli license hurt the Roberto Cavalli group’s revenues last year, although the Italian fashion company closed 2011 with sales inching up 1.1 percent to 178 million euros, or $247.2 million at average exchange, compared with the previous year.
This story first appeared in the February 23, 2012 issue of WWD. Subscribe Today.
While not audited yet, earnings before interest, taxes, depreciation and amortization are estimated to total more than 14.5 percent of sales, a gain compared with the previous year due to reorganization and improved efficiency in 2011, the company said.
Cavalli, which usually reports year-end figures in April, also estimated 2011 closed with a net profit. Cavalli returned to the black in 2010, spearheaded by chief executive officer Gianluca Brozzetti.
In 2011, Cavalli bolstered its retail network and expanded its product offer with a new accessories license for the Class Roberto Cavalli bridge line, inked with Compagnia Delle Pelli, and four new licenses for a home collection, which includes textiles, luxury tiles, wallpaper and furniture that will be presented at Milan’s international furniture and design show, the Salone del Mobile, in April. Leveraging on the home collection, three new Cavalli Cafés will open in 2012 — in Beirut, Doha and Kuwait — as well as two new Clubs in 2012, in undisclosed cities.
In 2011, the designer also signed a new license for the production and distribution of the Just Cavalli line with Staff International, starting with the spring 2012 season. The collection was previously manufactured by Ittierre. A new fragrance with Coty bows in the spring and last month, Cavalli inked a cobranding agreement with the Swiss haute horlogerie Franck Muller Group for the development and distribution of Roberto Cavalli by Franck Muller timepieces that will bow in the fall.
In 2011, revenues not derived by licenses accounted for 70.1 percent of the group’s business, up 4.1 percent from the previous year.
The company highlighted a new joint venture in China and plans to open the first Roberto Cavalli boutique in Beijing in March, as well as the expansion of Just Cavalli and Class Roberto Cavalli banners in the region. Globally, the company plans to open 15 stores in 2012, including units in New Delhi; Madrid; Munich; Saint Petersburg, Russia; Ciudad del Este in Paraguay, and an in-store shop in Tokyo’s Isetan.
At the end of 2011, group stores totaled 130. These include 77 Roberto Cavalli locations (of which 33 are directly owned); 29 Just Cavalli units; 20 Class Roberto Cavalli stores, and four Roberto Cavalli Junior stores. Retail sales grew 12.8 percent last year, compared with 2010, due to increased sales in existing stores and the opening of seven new units, including the opening of the first flagship store in Japan.
As of Dec. 31, net debt stood at 36.8 million euros, or $51.1 million, mainly attributed to real estate leasings, compared with 40.9 million euros, or $54 million, at the end of December 2010.
As Cavalli forges ahead streamlining operations and expanding its business, speculation arose earlier this week that the company could be up for sale — a rumor that was quickly put to rest by the company.
The group issued a statement Tuesday firmly denying a report on Italy’s daily Il Sole 24 Ore, published that same day, that Cavalli was in talks with Russian real estate group Tashir about an offer for the company. The Italian fashion house responded saying that it is not in talks to sell the company and denied any contact with Tashir. The designer himself is quoted in the story as saying the rumor on Tashir is “a joke,” that “nothing concrete is on the plate” and that if he ever did consider selling, it would only be a stake in the company, and not the entirety of it and only for “an indecent proposal,” or “at least 1 billion euros.” In the statement, the group said it “does not know [Tashir], nor has it initiated any pre-sale procedure with anyone at all.”
Talks surrounding the sale of Cavalli first emerged in 2006, when Saudi Arabian private equity fund SAB Capital submitted a bid for 60 percent of the fashion label. An agreement was never reached, and private equity houses Blackstone Group Holdings, Candover, The Carlyle Group, Cinven and Permira were said to be bidding for a stake in the brand, but Milan-based private equity firm Clessidra SGR SpA emerged as the preferred suitor. That deal never materialized, either, with discussions coming to a brusque halt in 2009.