MILAN — Valentino has joined the $1 billion club – two years earlier than it expected.
The fashion house has revealed that revenues leaped 48 percent last year to reach 987 million euros, or $1.09 billion, compared with 667 million euros, or $880.4 million, in 2014. And it expects double-digit growth to continue in 2016.
“In 2012 [when Qatari-based Mayhoola for Investments took control of the company], we set the goal to reach 1 billion euros in five years, but we reached it in three years, up from 370 million euros,” said Stefano Sassi, chief executive officer of the Rome-based firm. “The one-billion figure is symbolic; we have arrived at a dimension and critical mass that the brand did not have, with significant cash and profitability.”
Asked about a possible initial public offering, Sassi pointed out that market conditions are unfavorable and ruled out a listing this year, confirming a WWD report in December. Valentino’s owners have “manifested an interest towards a listing, and have started to evaluate [an IPO] but not the process,” advised by the Rothschild Group, as reported.
“There will be no IPO before 2017,” said Sassi, confirming that “no date had ever been forecast.”
Earnings before interest, taxes, depreciation and amortization last year rose to 180.2 million euros, or $200 million, from 98.5 million euros, or $130 million, in 2014.
Operating profit totaled 104.4 million euros, or $115.8 million, compared with 43 million euros, or $56.7 million.
Dollar figures are converted from the euro at average exchange rates for the periods to which they refer.
The ceo touted a “very solid organic growth in all markets” in 2015, with a 20 percent gain in like-for-like sales and two wholesale campaigns that performed very well. “Currencies helped and we also added 30 boutiques last year,” he observed.
Retail accounted for 55 percent of revenues. The group’s store network encompasses 160 units.
Accessories represented 50 percent of sales. Sassi underscored the increasing relevance of men’s wear, which last year accounted for 10 percent of revenues. “We have presence and visibility, and opportunities to grow in the next years,” he said.
The executive said the company plans to adhere to its strategy of focusing on “quality, long-term solid bases, clear values, modern style on solid values of reference, craftsmanship and timeless beauty” and to continue its expansion this year.
Declining to provide financial targets, Sassi said retail growth will be “controlled and balanced,” with an additional 20 to 30 stores, including relocations, opening this year. Despite difficult market conditions, Sassi said he expected double-digit growth in 2016. After a very good December and good January, Sassi said this year was variable, seeing a contraction among Asian consumers. “The first quarter saw a moment of reflection, a slowdown in fashion, but I am not worried,” said Sassi.
Coming up, he pointed to a “very important opening” in London’s Bond Street in March and new stores in Germany; the U.S. (Miami and Honolulu); in Japan, in Tokyo’s Omotesando in the second half; in Korea, and in the Middle East.
While expanding and evolving the group’s retail network, Sassi also believes in the relevance of wholesale, increasing the brand’s penetration at “very qualified points of sale. We are happy to be in top-quality boutiques.”
Valentino in the 2013 to 2105 period invested between 250 million and 300 million euros, or $275 million to $330 million at current exchange, in building its retail network because “we were recovering to close the gap with competitors,” but Sassi declined to pinpoint a figure for 2016 and 2017. “It depends on the market,” he said.
He underscored the “very relevant efforts” made last year, ticking off openings in New York’s Fifth Avenue, Canton Road in Hong Kong, and in Rome, near the Spanish Steps. “The investment now is more in line with that of competitors,” the ceo added.
After the Mirabilia Romae couture show in Italy’s capital last year, no major event has been planned for 2016. “That was such an important event and defined the level and quality we are aiming for,” said Sassi.
Asked about the ongoing debate over the timing of fashion weeks and the see-now, buy-now concept, Sassi said Valentino’s position is in line with that of Italy’s Camera della Moda and France’s Chambre Syndicale, underscoring “the values, substance, creativity and quality very connected to our way of doing things; but we are ready to evaluate alternatives. For sure we want to innovate at a digital level. That is a revolution and we are aware of the opportunities.”
Sassi reiterated that the Valentino brand will continue to show in Paris, given its history, and not move to Milan.
Discussing the currency fluctuations that have impacted fashion companies, he conceded they “have generated an earthquake, with benefits, but also expanded the delta from market to market. We have already done some adjustments,” adding that more steps will be evaluated. The Chinese have been traveling extensively in Europe, Japan and Korea. “They are intelligent and rational, they benefit from a market increasingly more open. In the long-term [prices] will be more reasonable, depending on the exchange rates,” he said.
Commenting on the store opening last year in Hong Kong, Sassi said: “I doubt Hong Kong will return to what it was, or if so, not shortly, but it is still a big market. We are very attentive to the visibility of the brand and the upgrading of its image [wherever it is present].”
Sassi was also upbeat about prospects in Japan, where Valentino “started later,” and its “very good growth rate.”
The U.S., which accounts for 25 percent of sales, continues to be “very solid” and is posting growth. Europe, including Italy, represents 40 percent of total revenues.