Roberto Cavalli's 2017 revenue down but there's light at end of tunnel
today Mar 23, 2018
Roberto Cavalli has started on the road to recovery. After a drastic downsizing in the last two years, and having still lost ground in 2017, the Italian luxury label owned by the Clessidra investment fund is forecasting a return to growth for the current financial year. Last year, Cavalli's revenue was relatively stable at €152.4 million, down only 1.8% compared to the revenue of €155.2 million generated in 2016. Only a short while ago, the label was posting much heavier shortfalls, in the region of €25 million per year.
Even better, in 2017 the label's direct sales (excluding licences) in the retail and wholesale channels grew 3%, to €110.3 million, and this despite the downsizing of Cavalli's distribution network, including a significant rationalisation of the wholesale channel and the closing down of six directly owned stores. On the other hand, licensing royalties fell, though the label posted a positive net financial position of €1.2 million.
Cavalli's main market remained Europe, generating nearly 48% of total sales, followed by the USA (31%). The group is now directing its efforts towards Asia, which only accounted for 7% of its revenue, notably by opening new stores in the region. In China and Macao, two stores opened in 2017 and three more will do so in 2018, the label's only new openings worldwide for the time being.
"We are very proud of these results. To exceed expectations during a restructuring phase and within a slow-growing market is anything but a given. In my opinion, this [result] confirms that our road map is sound and so are the creative and management directions we have taken," said Gian Giacomo Ferraris, in charge of Roberto Cavalli since July 2016, in a press release.
Another sign of this recovery is the significant improvement in EBIDTA, with losses reduced from €26.2 million in 2016 to €7.1 million last year. Cavalli is actually hoping to bring its operating income back in the positive this year, while the orders received for the latest collection, designed by Paul Surridge, bode well in terms of recovery.
The campaign for the women's Autumn/Winter 2018-19 ready-to-wear collection, which showed in Milan last February, has already recorded a 15% increase in retailers' orders worldwide, said Ferraris, who was also glad for the return of highly selective clients, among the specialist multibrand retailers and department stores, for example Bergdorf Goodman and Joyce.
Besides restructuring the company, notably resulting in several job losses in Tuscany, and downsizing the distribution network (as of 31st December 2017, Cavalli operates 87 monobrand stores, 46 of them directly run and 41 franchised), the label also carried out a major overhaul of its range and manufacturing organisation. From the Spring/Summer 2018, Cavalli produces and distributes its underwear, beachwear and sportswear collections using internal resources, and does the same for the men's line, until last year managed under licence by the Onward Luxury Group (formerly Gibò).
Some of Cavalli’s new menswear looks were shown with the women's collection on the Milan catwalks in February. Next, the men's line will be relaunched with a major event at menswear show Pitti Uomo, where Paul Surridge will present a fully fledged men's collection, as Roberto Cavalli will be the show's special guest for Pitti Uomo's next edition in June.
After the completion of the relaunch plan's phase 1, focusing on promoting a "sustainable development", Cavalli is keen to speed up the deployment of phase 2, which is centred on "value creation" according to Gian Giacomo Ferraris, who wants to further strengthen the positioning of Roberto Cavalli as a "lifestyle" brand. Agreements have recently been signed for the development of luxury residential projects in Dubai and Saudi Arabia for the Roberto Cavalli and Just Cavalli brands.
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