MILAN — Valentino could be fashion’s next billion-dollar baby. With sales jumping 59 percent to 478 million euros, or $530.6 million, in the first half compared with 301 million euros, or $412.3 million, in the same period in 2014, the storied Rome-based company is expected to hit the 1-billion-euro mark by the end of the year.
“We had set this target as part of a five-year business plan two or three years ago, but the brand is performing better than expected — depending on the second semester, we are getting close to reaching it this year,” said chief executive officer Stefano Sassi at the fashion house’s offices here Wednesday. Owned by the Qatar-based fund Mayhoola for Investments, Valentino regularly releases year-end financial results, but this is the first time the company has released its first-half figures.
Pleased but never self-aggrandizing, Sassi said his intention is to “bring some visibility” to this achievement. “This is a symbolic turning point for us that will lead us to a new ulterior phase,” he said.
The executive declined to elaborate on possible future developments — whether an initial public offering or the acquisition of other fashion brands — diverting any decision to the majority shareholders. But he did point out that there is no need for a cash injection and that the owners’ “interest in developing their presence in luxury” is a fact, depending on the opportunities. Incidentally, he said, there is “no Missoni dossier on the table,” addressing recent rumors about the group’s interest in that brand.
“We are supersatisfied, and the gains point to the brand’s critical mass and its management of financial resources,” Sassi said.
In the first half, Valentino’s earnings before interest, taxes, depreciation and amortization climbed to 87.5 million euros, or $97.1 million, compared with 46.7 million euros, or $64 million, in the same period last year. Dollar amounts are converted from the euro at average exchange rates for the periods to which they refer.
The company has more than tripled in size, expanding sales from 152 million euros in the first half of 2011. EBITDA in the first half of 2011 totaled 9.3 million euros.
Sassi attributed Valentino’s growth trajectory to the following:
- The brand’s retail network, which showed a like-for-like increase of 22 percent in the first half. “This is the fifth consecutive year we see a 20 percent retail growth,” observed Sassi.
- The opening of new stores, such as units in Hong Kong’s Canton Road and New York last year and in Rome this year. The company has added 40 stores in two years.
- The growth of its wholesale channel. “This is also a successful division, very relevant. It’s very selective and we pay great attention to it to protect the brand. Sellout is increasing,” said Sassi.
- New markets, as regions such as Korea and the United Arab Emirates are now directly managed.
- Foreign exchange rates as “10 percent of the increases are connected to this,” said Sassi.
- All categories and all divisions are growing. Accessories account for 55 percent of sales and ready-to-wear for 40 percent, allowing Valentino to be a leader in women’s apparel, said the executive, who once again credited creative directors Maria Grazia Chiuri and Pierpaolo Piccioli.
Sassi noted that markets are “solidly balanced,” with Europe showing the biggest growth, and an increase of domestic customers, too. He pointed to Japan, Brazil, the U.S. and Asia as areas gaining significantly. Hong Kong remains positive although “not growing,” but China is and “very well,” he pointed out, registering 30 percent growth in the first half and leveraging “the strength of the brand, and a careful management of points of sale for exclusivity.”
Europe is the brand’s largest market, accounting for 40 percent of sales, and growing 22 percent in the period. Asia and Japan represented between 35 and 37 percent, followed by the U.S., accounting for 23 percent of the total. In the latter, a store at the Royal Hawaiian Center opened in July and a unit is expected to open at Bellagio Las Vegas.
Retail investments since 2013 have totaled between 250 million and 300 million euros, or $341.1 million and $409.3 million at current exchange. “Retail was an element of weakness [before being acquired by Mayhoola in 2012]. You must have points of sale that represent the brand. We have an obsession for the label, but, really, this is the king tool to convey our message,” explained Sassi.
The executive said that July and August “confirm the trends” for Valentino. “We expect to continue [growing], we are positive. Product, style and lifestyle are connected, the cornerstones are solid and relevant, I don’t see why there should not be continuity.”