MILAN — A more streamlined company structure and a new management approach helped Roberto Cavalli Group close 2010 in the black.
This story first appeared in the February 23, 2011 issue of WWD. Subscribe Today.
While the company will report year-end figures in April, Cavalli said Tuesday that the second half “confirmed the positive performance” in the first six months of the year, and will enable the fashion house to post a profit in the 12 months ended Dec. 31.
As reported, the company returned to the black in the first half, when it reported a net profit of 1.9 million euros, or $2.5 million, compared with a loss of 3.5 million euros, or $4.6 million, a year earlier. Dollar figures were converted at average exchange rates for the periods to which they refer.
In 2010, sales totaled 176.2 million euros, or $232.6 million, down 6 percent compared with the previous year. The company attributed the decrease mainly to a 27 percent drop in royalties derived from the Just Cavalli license and the sale of nonstrategic businesses, such as fabric printing plants that were not working with Cavalli exclusively.
While not audited yet, earnings before interest, taxes, depreciation and amortization (EBITDA) are estimated to total more than 14 percent of sales, compared with 11.7 percent at the end of 2009, thanks to the reorganization and improved efficiency initiated in 2010.
Last month, Cavalli and Staff International signed a 10-year licensing agreement for the global production and distribution of the Just Cavalli line, starting with the spring 2012 season. In five years, the companies expect to reach wholesale sales of 250 million euros, or $342.1 million at current exchange, up from the current 80 million euros, or $109.4 million. A Just Cavalli flagship is expected to open in Milan early next year.
Sales not derived from licenses grew 7 percent, accounting for 70 percent of revenues.
While maintaining a cautious view in light of macroeconomic issues such as inflation, Gianluca Brozzetti, chief executive officer of the group, said the “fashion and luxury markets have picked up,” particularly in the Asia-Pacific region.
Retail sales gained 28 percent in the year. Cavalli attributed the growth to an 18 percent increase in comparable-store sales, the opening of seven boutiques and growth of the brand’s e-commerce site, which is operated by Yoox.
The company counted 135 stores at the end of 2010, including 71 signature boutiques, of which 26 were directly owned; 38 Just Cavalli units, and 26 Class Roberto Cavalli banners.
In 2010, the company renewed a number of licenses: with Marcolin for eyewear; Morellato for Just Cavalli jewels and watches; Albisetti for Just Cavalli beachwear and innerwear, and Dressing for the Class Roberto Cavalli line. Cavalli also signed eight new licenses with the likes of Staff International; Coty Inc. for fragrances; ISA Seta for Roberto Cavalli silk, innerwear, beachwear and gym, and Zengarini for the men’s footwear. Brozzetti said a new Roberto Cavalli perfume for women will be launched with Coty in the second half of the year.
Brozzetti added that the company is extending its reach into other lifestyle categories. In December, the designer and Lebanon-based Pragma Group revealed a licensing agreement to open five Cavalli Clubs and 15 Cavalli Cafés in the next five years in cities across the Middle East, Asia-Pacific and South America. There are existing Cavalli Clubs in Florence and Dubai — the latter also in a deal with Pragma — in addition to a Just Cavalli Club in Milan and three Caffè Giacosas in Florence.