MILAN — Despite a generally gloomy economic picture and the chill in Western-Russian relations following hostilities in Ukraine, some leading Made in Italy fashion brands on Thursday painted a positive picture of their business prospects for the current year and the years ahead.
This story first appeared in the October 10, 2014 issue of WWD. Subscribe Today.
Speaking to investors at the Luxury and Finance 2014 event, organized by Borsa Italiana (London Stock Exchange Group) in collaboration with Vogue Italia, Brunello Cucinelli, founder and chief executive officer of the namesake company, in 2014 said, “We will have a very special year of double-digit growth in both [earnings before interest, taxes, depreciation and amortization] and sales.” He also said he foresees “healthy, double-digit growth in both sales and EBITDA over the next two years.” Cucinelli’s sales are strong, especially in foreign markets.
Speaking of foreign markets, Cucinelli said the U.S. “is our first market. It is moving very well.” He said the firm considers the U.S. “like a domestic market.”
In his pitch to investors, Cucinelli said the company, which over the past couple of years has paid out 25 percent of its profits as dividends, intends to continue doing so over 2015-16.
The company also will continue to invest in the business some 4 to 5 percent of sales a year, after having invested some 110 million euros, or about $140 million at current exchange, over the past three years, including the opening of seven to eight stores a year.
Pricing power remains a key asset of the brand: Cucinelli said the average ticket in the company’s stores is 1,000 euros, or $1,270.
Taking a moment to give his impression of broader trends, Cucinelli said he believes there is a shift in consumer attitudes. “We have reached a point where consumerism is in decline. We are going back to using things.” He characterized this development as a positive, adding that people are now more interested in quality than quantity. “What does this mean? It means that we will consume a bit less…it’s a real sentiment. We will use things in a different manner,” he said.
Emilio Macellari, chief financial officer of Tod’s Group, was also upbeat on the Italian leather-goods maker’s prospects. Although he didn’t issue any specific figures, Macellari said, “As far as the full year , the current level of analyst consensus is something we consider fair enough, even if there are pressures.” He cited as an example the recent demonstrations in Hong Kong, which took place during Golden Week, one of the region’s key shopping periods of the year. “However, we are not worried,” he said. Speaking of the firm’s 2015 prospects, Macellari told investors, “We think next year can be better than the current year because of improved comparables,” as the effects of the company’s wholesale rationalization program won’t be repeated. He expected the Tod’s and Roger Vivier brands, in particular, to register top-line growth.
Macellari also said Tod’s SpA would like to acquire Roger Vivier and integrate it completely when, in 2016, the brand’s license expires. “The agreement foresees that we pay 12 percent royalty on wholesale prices,” he explained, adding that directly integrating the shoe brand into Tod’s would be “very important, accretive. Net of royalties, EBITDA margin is higher than the group’s average,” he said.
Macellari said Tod’s already had tabled acquisition talks in 2011, but Roger Vivier — which belongs to another company controlled by Tod’s controlling shareholder and ceo, Diego Della Valle — declined to sell. Della Valle does not participate in discussions between the two companies, he noted. In any case, talks regarding the license’s future will recommence in July 2015, he said. “We need to know by the end of 2015 [what type of relationship Tod’s will have with Roger Vivier] in order to prepare a business plan for 2017.”
Separately, Macellari also sounded a bullish note on Tod’s troubled Hogan brand. “Hogan did the unpleasant part of its [restructuring] job to the spring-summer 2014. From now on, it can only do better. Rationalization is over.”
He said that, over the next 10 years, Hogan’s long-term potential could attain revenues of 700 million to 800 million euros, or $890 million to $1 billion, in annual sales. Referring to recent remarks made by Della Valle that Tod’s could look for other ways to generate more value from Hogan and asked if Tod’s would consider spinning off the brand, Macellari said, “For the moment, we aren’t talking about anything.” Then, he added, “Whatever we do, we will keep control of the brand.”
Andrea Tessitore, ceo of eyewear maker Italia Independent, said he was upbeat about his company’s prospects and close to signing a new collaboration “with a French luxury-goods brand for an accessory, but not eyewear.” The company already has carried out other marketing-related collaborations, including with Diesel (in jeans), Borsalino (hats) and Vertu (high-end mobile phones). Recently, the company developed a signature sneaker collection with Adidas.
Tessitore also said he sees Italia Independent’s listing on Milan’s AIM segment for small companies as a step on the way to a listing on the exchange’s main MTA segment for larger companies. He said such a move would be “in the interest of all stakeholders” in the company. While technically feasible in a year, the process is complex, so it is too early to set a target date, he observed.
“We are at a critical juncture,” Tessitore said. “We are no longer small, but we are not yet large. Next year should be the year when we reach important revenue levels.” While not issuing any direct targets, he said, “analysts see us reaching 50 million euros [or $63.5 million] in sales in 2015,” a figure he didn’t dispute.