MILAN — “We are small, but we will grow.”
A year into his new post after exiting Versace in May 2016, and tasked with relaunching the Roberto Cavalli brand, chief executive officer Gian Giacomo Ferraris said the reorganization of the company is behind him and admitted he feels “more tranquil” about the development of the label, which he believes still has “enormous potential.”
“We have seen indicators of a turnaround since March,” said Ferraris in an interview at the company’s new showroom here.
To be sure, since joining the Italian company, Ferraris has set up a new management team; hired a new creative director, Paul Surridge, and set in motion several changes in production and distribution that are already bearing fruit. “After two consecutive years of a 25 percent decline in [the sum of retail and wholesale] sales, one of the first objectives was the reorganization of the company in a moment of slow global growth. Our first goal was to stabilize our revenues,” said Ferraris.
He said this was “a very important moment” for the company. “As of June 30, our wholesale and retail sales are up 4.9 percent compared with last year,” he noted. By the end of the year, the uptick will be 8 percent.
While the arrival of former Z Zegna creative director Surridge from Acne Studios was revealed in May and his first collection, for spring 2018, will bow on Sept. 22 in Milan, Ferraris has brought the production of the brand’s men’s, children’s and silk accessories collections in-house, restructuring Cavalli’s Osmannoro plant outside Florence.
“We set the foundations for growth. By internalizing these products, we can maintain the gross margin and we’ll have more margins on the core products. When we grow our sales, margins will automatically grow,” the ceo explained. Royalties accounted for 30.2 percent of sales and they will represent 25.2 percent of the total by the end of the year.
So what needed fixing first? Ferraris said the company “had become a specific producer of eveningwear and had neglected business in Asia and important categories such as men’s wear and accessories, as well as children’s wear.” The executive set about correcting this and expects Surridge to give direction to all categories and present a more rounded collection of women’s wear that will include much more daywear.
Just back from a trip to Asia, Ferraris said that, at the end of July, the company opened a men’s and women’s store in Beijing’s young Sanlitun area. “Men’s wear already accounts for 50 percent of sales at that store,” he said. Surridge will attend the grand opening of the boutique, set for Nov. 2. The store concept has been revisited, while not yet defined by the designer. Three more stores are slated to open in China, in Beijing, at Shin Kong Place in October; in Harbin in early 2018, and in Chengdu in early 2018. Macao will also open in 2018.
The company also just opened a store in San Diego, bringing the total number in the U.S. to nine. America and Europe each account for more than 30 percent of sales. “I hope Asia in five years will also represent 30 percent of revenues,” said Ferraris. Despite the brand’s lack of penetration in Asia, its perception in the region is “very strong,” he contended.
Retail sales are expected to be up 5 percent by the end of 2017 compared with last year, accounting for 45 percent of revenues.
Wholesale revenues are expected to be up 13 percent in 2017, lifted by the new products in stores, reaching 46 million euros. “It is to be noted that we are growing in a difficult year with less stores, and third parties are trusting us,” he said.
The company has seen its share of changes over the past few years. In May 2016, Italmobiliare SpA, the publicly listed investment group owned by the Pesenti family, took control of the brand’s most recent owner, Italian private equity fund Clessidra Sgr SpA. The founding and namesake designer retains a 10 percent stake in the firm, but has eased out of the fashion industry. Surridge succeeds Peter Dundas, who exited the company in October 2016.
The brand’s fall campaign also telegraphs the company’s new course, with Eva Herzigova wearing a white suit, flanked by Jarrod Scott and photographed by Jack Waterlot. “We want it to be about glamour, sensuality and joy of life. Roberto Cavalli gave us the imprint. We are respecting the past and embracing the future,” said Ferraris.
As reported, last year revenues totaled 155.2 million euros. Ferraris said he had seen earnings before interest, taxes, depreciation and amortization improve by 70 percent in the first six months of the year. In 2016, the company reported a loss of 55.2 million euros and a negative EBITDA of 26.1 million euros. The company has no debt.
Ferraris confirmed his plan to breakeven by mid-2018. “We are even ahead of our plan,” he said, adding that “2017 is the year of credibility.” Asked about his main concerns, he said they were mainly the socio-economic variables.
Ferraris has also set in place a new management team that includes general manager Luigi Cantone; Silvia Carteny, director of general affairs; marketing digital officer Andreas Bergbaur, and Angelo Russo, director of the supply chain. He has also tapped a new America ceo, Salvatore Tramuto, and a new Asia ceo, Filippo Gori.
The group’s home division is also “performing very well,” he said. Cavalli has just inked a collaboration with Middle East luxury real estate developer DAMAC Properties to launch the first villas to feature interiors with the Just Cavalli style. The project is located in one of Dubai’s most prestigious golf communities.