FASHION FUELS HDP’S 2001 LOSS
Byline: Luisa Zargani
MILAN — Holding di Partecipazioni Industriali’s fashion division is making what may be its last days as part of the company costly, if not exactly memorable.
Net losses attributable to fashion totaling more than $190 million, coupled with restructuring and the impact of last fall’s terrorist attacks, pulled HdP $203.6 million into the red in 2001. The 2001 net loss compared with prior-year profits of $34.6 million. Sales were essentially flat at $2.94 billion. HdP’s publishing division registered 14.9 percent sales growth, while fashion suffered from a 39.7 percent revenue drop at GFT Net, to $317 million, and a 2.4 percent drop at Fila, to $860 million.
Dollar figures have been converted from the euro at current exchange rates.
A statement issued by HdP said talks aimed at the divestiture of the fashion division are at “an advanced phase,” but no official announcement was made about the much publicized sale of Valentino to Marzotto or of Fila to the American investment fund Continental. “The board will reexamine the project of splitting the group [in two separate publishing and fashion companies] if the negotiations will not be favorably concluded,” HdP said.
HdP attributed the sales decline at GFT Net to the termination of licenses, the gradual disengagement of the fashion division and the soft economy. GFT Net reported a loss of $69.8 million in 2001 compared with a loss of $25.4 million the previous year and an operating loss of $42.1 million compared with $8.1 million in 2000.
A positive note came from Valentino, consolidated under GFT Net, which registered a 12 percent increase in sales, but no specific figure was released. The increase was attributed to an expansion of direct distribution, the growth of retail sales derived from the opening of stores in the U.S. — in Bal Harbour, Fla., and Honolulu — and Hong Kong, as well as from the Italian and French boutiques that balanced a drop in same-store sales in the U.S. market. Operating losses were $14.7 million compared with $12.9 million the previous year, while net losses of $25 million compared with $22.4 million the year before. In the second half of the year, Valentino plans to open a store in Las Vegas. In the U.S., there are also stores in New York, Palm Beach and Los Angeles, and a franchised store in Naples, Fla.
Fabio Giombini, Valentino’ s chief executive officer, recently told WWD: “Sales in the U.S. were up 15 percent before Sept. 11. In the worst period, after the attacks, our New York sales dropped 40 percent.” Sales did pick up closer to Christmas, he noted.
The U.S. accounts for 36 percent of sales and is the company’s second-largest market after Italy. France ranks as third. In the Via Montenapoleone store in Milan, which was renovated and reopened in September, Giombini said sales grew 50 percent. In total, there are 19 owned boutiques in the world and 15 franchised stores. In Japan, there are four brand stores and 17 in-store shops opened with a local partner. Through a joint venture, Valentino also opened two boutiques in Hong Kong and one in Singapore last year.
In the immediate future, the firm plans to open boutiques in France, Spain and England.
In 2001, the structure of GFT Net was modified by the sale of the Bosconero manufacturing plant, near Turin; the sale at the end of October of the Sahza label to Mariella Burani Fashion Group, and of real estate and land property, for a total of $17.1 million.
At Fila, consolidated sales dropped 2.4 percent to $860 million from $873 million and net losses were $122.5 million against a loss of $62.8 million in 2000. HdP attributed the losses to the economic slowdown after Sept. 11, a weak Korean currency and the serious economic crisis in Argentina, a pivotal market for Fila.
Although HdP said it focused on cutting costs over the year, operating losses were $39.5 million compared with $9.5 million in 2000. Industry sources noted that Fila’s debt of $315.1 million is weighing heavily on the sale of the firm. In 2001, Fila launched a Ferrari product line and focused on retailing in Europe, with the opening of two stores in Milan and London and four franchised sales points in Italy.
Based on the first two months of 2002, HdP said in the statement it did not “believe it had overcome the difficulties encountered last year, and in particular in the second half of the 2001. However, there are some signs that allow us to expect a more favorable economic situation during the year.”