LONDON — June is proving one busy month for Compagnie Financière Richemont, which announced Monday that it had sold the leather goods house Lancel to Italy’s Piquadro SpA, an accessories and luggage company. Both companies confirmed earlier this year that a sale was in the works.
In a brief statement, Richemont said the sale would have no material impact on its balance sheet, cash flow or results for the year ending March 31.
“Piquadro was a stand-alone brand for a long time,” Marco Palmieri, president and chief executive officer of the Italian accessories and luggage company, told WWD in an interview on Monday. Assessing the group’s existing production facilities, he realized the company had untapped potential. “We are an industrial group and production is strategic for us. Piquadro is healthy and we started looking at brands that had a solid and global identity, but that were facing difficulties. For example, The Bridge [acquired in 2016], had gone through an unsuccessful generational change.” Palmieri touted the turnaround of that brand, which in one year was back in the black and was repositioned for a younger target. “The Bridge had this hippy, natural image that was always part of its history and is very much appreciated by Millennials today. Last year, sell-out was up 36 percent. It’s the same brand, but refreshed and made more contemporary,” he explained.
Similarly, Palmieri trumpeted the “excellence” and Parisian style of Lancel. “We will add our industrial capacity, the strength of our two manufacturing plants, and support it with our research and development and operational speed. This will help at a time when customers always want something new. If you don’t have an efficient industrial structure, you won’t succeed — you are either unable to be in stores at the right time, or the product is banal, or too expensive or you need to change its positioning.”
The goal is “to maintain the value of a historical French house — we have a lot of respect for this type of culture,” continued Palmieri. He declined to provide details about possible changes to the structure of Lancel as still “observing” it.
In the 12 months ended March 31, Lancel sales totaled around 53 million euros, with negative earnings before interest, taxes, depreciation and amortization of around 23 million euros. As of Monday, Lancel had a positive net financial position of 41 million euros and net assets of around 36 million euros. Palmieri said Piquadro had no cash outlay as the company is to pay back Richemont, which will receive a share of profits earned by Lancel in the ten years following the closing of the sale. The cumulative income to Richemont will not exceed 35 million euros.
The purchase of Lancel, said Palmieri, is part of a strategy to aggregate accessories brands that started with The Bridge and one that he is “determined to bring forward to generate growing synergies,” hinting at possible future acquisitions.
Lancel counts 60 directly operated stores and 11 franchised units and the brand is distributed in 39 countries.
The closing of the deal comes on the heels of Richemont’s acquisition of Watchfinder.co.uk, a pre-owned premium watch specialist, which was announced on June 1.
Luca Solca of Exane BNP Paribas said the divestiture was a “small positive for Richemont, as it shows a focus on the rationalization and loss reduction in its soft luxury division.”
Richemont acquired Lancel in 1997 for 270 million euros.
Piquadro Group, which is listed on the Milan Stock Exchange, closed its financial year ended March 31 on an upbeat note. It reported a 28.6 percent increase in revenues to 97.6 million euros compared with the previous year.
The increase was attributed to the consolidation of Florence-based leather accessories brand The Bridge SpA, which reported sales of 23.76 million euros in the 12 months ended March 31, and to a 4.3 percent increase in revenues of the Piquadro brand.
In 2016, Piquadro acquired an 80 percent stake in The Bridge for 3.17 million euros. The Bridge manufactures its collections in Tuscany and is known for the use of a naturally treated leather with a cognac tone. Piquadro was founded near Bologna in 1987 by Palmieri.
Its distribution network extends over 50 countries around the world and counts 99 Piquadro boutiques, 63 of which are in Italy and 36 of which are abroad, including 55 directly operated stores and 44 franchises. The group also lists 12 Bridge boutiques in Italy and three abroad.
Lancel had struggled for success in the Swiss giant’s stable, and has a different market positioning from Richemont’s other fashion and soft luxury brands. It’s no surprise, then, that Richemont wanted to sell the French leather goods maker.
The Lancel sale comes a year after Richemont offloaded Shanghai Tang to the Italian entrepreneur Alessandro Bastagli, president of Finalba SpA holding, and president and ceo of the textile company Lineapiù Italia SpA and the clothing firm A. Moda SpA.
At the time, analysts said the Tang move dovetailed with Richemont chairman Johann Rupert’s cost-cutting program at the luxury giant. They said the sale showed that Rupert was standing by his vows to transform Richemont into a leaner and more efficient operation.
Lancel was founded in 1876 and marked its 140th birthday in 2016 with a 104-page book called “Lancel, Maison Parisienne Depuis 1876,” including images created by a range of artists — including Marjane Satrapi, Anaïs Boileau and Omar Victor Diop — all revolving around Lancel’s bags.