MILAN — Despite the uncertain economy, Roberto Cavalli Group plans to continue to invest in building a retail network, which, in the first six months of the year, helped lift the fashion house’s bottom line.
In the period ended June 30, the Italian company reported a 6.8 percent increase in net profits to 2 million euros, or $2.9 million, compared with 1.9 million euros, or $2.3 million, in the first half of last year.
“Directly owned stores allow a brand to go through a crisis relatively unharmed,” Gianluca Brozzetti, chief executive officer of the group, told WWD. A tighter control over the brand is an asset in building and developing it, he added.
The firm is also expanding categories such as accessories, including handbags and small leather goods; footwear, and men’s wear. “To push them, we need strong stores,” said Brozzetti, noting these items also need dedicated spaces in the boutiques. Accordingly, Cavalli is investing in the redesign of several of its stores.
In the second half of 2011, two flagships will open in Tokyo and Beijing and units in London, New York and Beverly Hills will be remodeled and expanded. The firm is also buying back its Venice store. There are 136 group stores, of which 72 are Roberto Cavalli units and, of these, 26 are directly owned. Others include 38 Just Cavalli and 26 Class Cavalli stores.
In the first half, revenues rose 1.9 percent to 87.8 million euros, or $127.3 million, compared with 86.2 million euros, or $106 million. Retail sales grew 7 percent and accounted for 70 percent of Cavalli’s total business. In particular, Roberto Cavalli boutiques showed an 18 percent increase in sales. A new store in Cannes, the buyback of a Rome boutique and the Harrods concession in London all contributed to this performance.
Dollar figures are converted from euros at average exchange rates for the period.
The company said sales derived from licenses dropped 5 percent, mainly due to the underperforming Just Cavalli license. “This was expected,” said Brozzetti. In January, the group and Staff International signed a 10-year licensing agreement for the global production and distribution of the Just Cavalli line, starting with the spring season. The line was previously produced by Ittierre SpA, which, after two years of government-backed bankruptcy protection, was acquired by Albisetti SpA in January.
The first Just Cavalli line produced by Staff International, which is controlled by Diesel’s parent company Only the Brave, will launch during Milan Fashion Week on Sept. 24 in an industrial location, Galleria Orobia, in the city’s Via Savona fashion district, generally used for art exhibitions, and is a new site for Just Cavalli. “It’s a more contemporary, fashion brand, more casual and younger, with a new aggressiveness,” said Brozzetti of the collection.
A new ad campaign will bow at the end of the month. New Just Cavalli flagships will open in Milan and New York by mid-2012. Early next year, there will be a new Just Cavalli online store operated by Yoox, which also runs the Roberto Cavalli e-commerce store.
“We have big plans to have a strong presence in China with Just Cavalli,” said Brozzetti. In a joint venture agreement with UCCAL Group, headquartered in Shanghai, the company will open 100 stores, of which five will be Roberto Cavalli, 70 Just Cavalli and 40 Class Roberto Cavalli.
Coty Inc. will launch a new signature fragrance in February, followed by a Just Cavalli scent in February 2013.
As of June 30, net debt with banks stood at 16.2 million euros, or $23.5 million. There is an additional debt of 25.7 million euros, or $37.2 million, for leases on real estate properties and stores, for a total of 41.9 million euros, or $60.7 million. At the end of June last year, total debt stood at 40.9 million euros, or $50.3 million.