FIN.PART PUTS PIECE ON BLOCK

Byline: Courtney Colavita

MILAN — After a four-year buying feast, Italian fashion group Fin.part is going on a diet, preparing to shed some of its assets.
Fin.part chairman Gianluigi Facchini told an analysts meeting Thursday the group was putting its sportswear division and real estate investments on the market in an effort to offset the $402.2 million in net debt incurred during its acquisitions binge, which included the house of Nino Cerruti last year. (All figures are converted from the euro at current exchange rates).
Facchini would not specify the asking price for its sportswear subsidiary, Pepper Industries, which produces the Marina Yachting, Henry Cottons and Moncler labels, but said the goal was to sell the division by the end of the year.
The sportswear division generated $183.4 million or 48 percent of the group’s 2001 sales.
“We believe the sportswear division has reached a strong level and its sale will create value for the group,” said Silvano Storer, the recently appointed chief executive officer of Fin.part.
It also means the group will be intensely focused on building the Cerruti brand.
The proposed plan not only calls for the selloff of the sportswear division and non-core businesses, such as real estate assets, but also calls for a cutback in group overhead and its workforce.
The group’s agenda also contained provisional plans if the sale of the sportswear division does not materialize: If Fin.part does not get the price it wants, an option would be to sell other holdings, such as the footwear brand Andrea Pfister and luxury brand Maska.
“If we sell sportswear, then everything else is an opportunity, not a must,” Storer said. “Maska is an opportunity. We can sell it or not. [Pfister] is an opportunity. We can sell it or not.”
Although Storer would not confirm the possibility that Fin.part would also sell its luxury linens and loungewear brand, Frette, sources close to the company said Frette could also be on the block.
“There’s flexibility in our plan,” Storer said. “We don’t want to sell the business, but we want to demonstrate to anybody who believes we’re in a troubled position with the debt that it’s not true. Just selling three out of our four businesses puts us in a positive position with our cash flow.”
It might not be so easy to find a buyer, though. Many of the usual buyers of luxury or fashion companies, like LVMH Moet Hennessy Louis Vuitton and Prada Group, have been on the sidelines lately and have been selling off their own “non-core” assets.
Fin.part shares closed at 90 cents, down 0.2 percent, on the Milan Bourse. Its 52-week high is $1.01
Founded in 1996 by Facchini, Fin.part quickly started amassing medium-to-high-end fashion labels, including last summer’s acquisition of Cerruti.
But while sales have steadily increased, so has debt. Like other fashion groups that have gobbled a bit more than they could chew, Fin.part is ready to sell some of its subsidiaries to pay down the debt and better manage the business.
In 2001, the company said sales jumped 38.5 percent to $376.8 million. However, due to the Cerruti acquisition and its restructuring costs, Fin.part reported a net income loss of $33.1 million.
Both Facchini and Storer are optimistic about the next two years and said that under the new plan, net profits should reach $47.2 million this year, while sales should climb 58 percent to $597.7 million by 2004.
If the proposed plan goes as expected, the group also predicts its debt to drop to $99.4 million by the end of the year, or a 0.6 debt-to-equity ratio.
“The company has always had this industrial-financial approach, which is the value creation approach,” Facchini said. “The creation of value comes through the restructuring and relaunch of the various subsidiaries. After that, we are, of course, looking to transform the [subsidiaries’] potential value into actual value for the company.”
With so much in the works, where does that leave Cerruti? Facchini and Storer said that Fin.part was completely dedicated to what they called the “refoundation” of the storied brand. The company has announced a series of initiatives to help reposition the brand, which includes the Cerruti, Cerruti 1881 and Cerruti Jeans lines.
As expected, Istvan Francer, designer at Maska, will take over creative responsibilities for the signature Cerruti line. Meanwhile, design teams will oversee Cerruti Jeans and Cerruti 1881. Production will stay in house, with Pepper Industries producing Cerruti Jeans and Maska handling Cerruti women’s wear.
Facchini emphasized that the relaunch of Cerruti was still in its initial phase, but said that he had already begun tapping new management, including Massimo Caccialupi as Cerruti’s new general director. Before Cerruti, Caccialupi worked at Levi’s, Benetton and Marzotto.
Fin.part also announced a production agreement with Claudio Del Vecchio’s Retail Brand Alliance. Under the agreement, Maska will produce the Adrienne Vittadini line and RBA will maintain its distribution.

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