MILAN — Rent re-negotiation is one of the key results of the coronavirus pandemic around the world and when landlords allegedly turn a deaf ear, there may not be any other solution than to sue.
Valentino is the first major luxury brand to want out of Fifth Avenue by filing a lawsuit in New York to terminate a lease for its sprawling flagship on the storied shopping street.
The Rome-based couture house declined to comment on the suit, which was first reported by The Wall Street Journal.
A market source said Valentino is “pursuing different strategic options and opportunities that may involve a premature termination of the lease as it is no longer possible for Valentino to operate its retail experience as originally contemplated.”
The source said “the recent mandatory government closure of the Fifth Avenue boutiques is increasingly having a strong impact on the fashion industry, causing changes in consumer behavior.” Flexibility and alignment with consumer values “are paramount” today, continued the source, underscoring how the company’s management has realized that Fifth Avenue is no longer in line with the brand’s strategies and vision. It is understood the lease expires in 2029.
Ironically, news of the suit came as New York City on Monday moved to phase two of the lifting of its lockdown due to the pandemic. The new phase will allow stores to open their doors to shoppers, with limits on the number of consumers allowed inside at a time as well as other safety protocols in place. This phase follows several weeks of New York City stores being able to offer curbside pickup to shoppers.
Valentino’s suit follows a similar one by Victoria’s Secret parent company L Brands, which last month filed a lawsuit in New York to break the lease on one of its most expensive stores, in Herald Square, a 362,191-square-foot property owned by SL Green Realty Corp., one of the city’s largest landlords.
To be sure, Fifth Avenue had been going through some major image changes, even before the COVID-19 outbreak, increasingly becoming a tourist destination with a mix of high-end and mass market brands. Last year, Tommy Hilfiger vacated its Fifth Avenue flagship, following several high-profile exits from the street, among the most expensive in terms of rents, from Polo Ralph Lauren to Henri Bendel.
Times have definitely changed since 2014, when the Valentino flagship was inaugurated, the company’s biggest location in the world, and hailed as making a major statement. Two years after the acquisition by Qatar-based Mayhoola, it signaled the end of a chapter of strategic brand revitalization and growth, and the start of a phase of global expansion.
At 693 Fifth Avenue, in the iconic John Burgee and Philip Johnson-designed building that once housed Takashimaya, the store covers three levels.
Conceived by Pierpaolo Piccioli, flanked by then-co-creative director Maria Grazia Chiuri, and David Chipperfield Architects, the store covers 20,000 square feet.
There is another Valentino store in New York, on Madison Avenue, and the brand is available at a network of wholesale accounts including Bergdorf Goodman, Bloomingdale’s, Neiman Marcus, Nordstrom and Saks Fifth Avenue.
The company is present in 115 countries throughout 212 Valentino directly operated boutiques and across more than 1,500 points of sale.
As reported, despite the impact of the social unrest and protests in Hong Kong last year, Valentino SpA reported a 2.4 percent increase in revenues in 2019. In the 12 months ended Dec. 31, sales rose to 1.22 billion euros, compared with 1.19 billion euros in 2018.
On June 1, former Gucci executive Jacopo Venturini was appointed Valentino’s new chief executive officer, succeeding Stefano Sassi, who had been leading the company since 2006.