IS CALVIN DEAL OFF? HDP’S ROMITI COOLS ON FASHION BUSINESS
Byline: Samantha Conti
MILAN — Calvin Klein’s deal with HdP might be on hold.
It appears that Maurizio Romiti, chief executive of Holding di Partecipazioni Industriali, parent of GFT Net, which has the license for Calvin Klein Men’s wear, has given up on fashion.
Despite repeated denials over the past year that he was planning to sell HdP’s fashion division, and on-again/off-again rumors to that effect, Romiti made clear in an interview with a daily newspaper here that HdP’s priority is to build up its media — and not its fashion — business. Other Italian publications immediately speculated that Romiti’s remarks are a hint toward a pending spinoff of its fashion business and how that might affect an important deal rumored to be in the works with Klein.
As reported in January, Klein was said to be in talks with HdP about an ambitious joint venture involving his CK bridge line. Those reports seemed to indicate that HdP had again taken an interest in fashion, but Romiti’s latest comments have further complicated any such interpretation.
Klein officials could not be reached for comment Monday, but his European production is in flux. On March 1, WWD reported his manufacturing and retail agreement with Stefanel for CK bridge sportswear has ended, and the company said it would shortly announce a long-term strategy for the production of the CK collections in Europe.
In Romiti’s interview with Puntocom, which concentrates on communications and multimedia, he said HdP would be focusing on its editorial and communications business over the next three years in a bid to create greater value for the group and its shareholders.
“In life, you have to make choices, and that’s just what we’re doing,” he said in the interview published on Friday. “Over the next three years, we are committing ourselves to the development of the editorial and communications sectors+.We are rapidly expanding both our traditional editorial activities and our multimedia business in Europe.”
Romiti goes on to say that HdP’s ambition is to be “the leader or co-leader in all of the multimedia market segments in which we are present.”
Asked whether HdP was planning to pour all of its attention — and money — into its media business, Romiti responded: “We are simply pursuing the logical development of the group, and our aim is to create value for HdP and for its shareholders. We have significant resources for this project, but those sources are not limitless. We are making certain choices.”
Romiti was not available for further comment, although an HdP spokeswoman confirmed all the quotes in the published interview. However, she declined to elaborate.
HdP is the parent of the editorial group Rizzoli Corriere della Sera, which publishes the influential daily paper Corriere della Sera and Gazzetta dello Sport. The company also owns the Spanish paper El Mundo and controls publishing groups in France, Germany and the U.K.
HdP has also recently launched HdP.net, the digital platform for the group’s multimedia projects and new initiatives.
To anyone following the recent events at HdP, Romiti’s statements clearly signalled that fashion is now the stepchild at HdP. The company’s fashion division includes Valentino, Joseph Abboud and GFT Net, which manufactures clothing under license for Klein and other brands. HdP also controls the sports clothing and equipment company Fila.
Major Italian papers picked up quotes from the Puntocom story, saying it was clear that Romiti no longer has fashion on his mind.
“HdP ready to say goodbye to fashion” trumpeted the left-leaning La Repubblica, while Fiat-owned La Stampa said “HdP, more editorial and less fashion.” One columnist called Romiti “the financial Terminator” for the speed with which he’s jettisoned the fashion business — and moved on to other ventures.
Romiti’s statements come as little surprise, considering recent developments at the company.
As reported, banking and industry sources noted this month that HdP wants to sell its entire fashion division, and has been in talks with Gucci. Romiti has denied those reports, saying, “there are no contacts — not with Gucci, not with anyone,” while Gucci executives have declined to comment.
But reports that HdP was eager to sell its fashion division have been swirling for the past year. Sources last year said the company had given a mandate to Goldman Sachs to help sell the fashion division, although HdP denied it. It’s also never been a secret that HdP’s core shareholders — a 12-member syndicate that has a 46 percent stake in the company — have always favored the editorial rather than the fashion business.
When the group was formed in 1997, Romiti wanted to build an empire to rival that of LVMH Moet Hennessy Louis Vuitton. And with a cash pile of about $600 million, he was in a position to do so.
“We have to build a group made up of Italian and non-Italian companies, one that responds to the various needs of the luxury goods market,” he told WWD in 1998.
But Romiti’s group was not to be. The only fashion brands in Romiti’s stable are Valentino and Joseph Abboud. In addition, restructuring costs — not to mention the loss of key licenses from Giorgio Armani — have weighed heavily on GFT Net’s bottom line.
In 1999, GFT Net’s sales dropped 7.3 percent to $642.6 million and the company posted a net loss of $78.1 million due to the drop in licensing income and re-structuring costs. This year, sales at GFT Net are expected to drop 15 percent to $533.7 million.
While Valentino’s sales have increased steadily, net losses continue to grow, because HdP is charging the fashion house for the acquisition. Earlier this year, Fila announced surprise losses of $65 million. HdP plans to announce its 2000 results on Thursday.