Permira left in race for Valentino

European private equity fund Permira has offered to acquire all of Valentino Fashion Group. Permira put in a bid of €35 per share, which will amount to a total of €2.6 billion. The company already holds 29.6 percent in the company, which it acquired from the Marzotto family's investment vehicle International Capital Growth. Terms of the negotiations with the Marzotto family – majority owners of VFG – stipulated that the family discontinue talks with other interested parties until 28 May, when the talks would expire. In the meantime, the Carlyle Group – the US private equity firm – has dropped out of the race for the Italian fashion group, leaving Permira as the sole contender.

Permira's expenses will not only be limited to the sum of €2.6 billion. Once it has acquired a majority stake in the group, it will have to make a bid for the outstanding shares in Hugo Boss AG, of which 50.9 percent is owned by VFG. The remaining shares in Hugo Boss are currently valued at €1.7 billion. According to WWD, Carlyle decided the price was too high and withdrew from the proceedings.

Permira is currently in talks with the Marzotto family to acquire its stake of 24 percent in the family. If the negotiations succeed by 28 May, Permira could end up with a 53.6 percent stake in VFG, which includes fashion house Valentino and lifestyle brand Marlboro. Meanwhile, VFG chairman Antonio Favrin owns almost 20 percent of the group through his own holding company, Canova Investimenti. Favrin is said to be at odds with the Marzotto family since he was reported to have joined forces with the Carlyle Group in a take over attempt of VFG. Canova could not be reached for comment.

www.valentinofashiongroup.com
21 May 2007

Valentino 2006 profit gain

Valentino Fashion Group has posted a 5.2 percent rise in net profits to €95.2 million for 2006. The Italian fashion group, which owns Hugo Boss AG and fashion house Valentino, said it expects continued organic growth and improved profitability for 2007, thanks in particular to strong wholesale and retail performances in the first two months of the year.

For the year ended 31 December 2006, operating profit leaped 20.7 percent to €243.3 million. Consolidated sales rose 13.6 percent to €1.96 billion, thanks to the launch of product extensions and an increase in directly operated stores. The group opened 76 new stores last year. Direct sales results thereby increased to €302 million, and now account for 15 percent of total sales. By year's end, the group counted 284 directly operated stores.

All business units saw double-digit growth. The women's ready-to-wear division – which includes Valentino, Hugo Boss, and the M Missoni and Marlboro Classics licenses - performed particularly well, with sales up a whopping 36 percent to €420 million. Group sales of footwear and leather accessories jumped 27 percent to €211 million. The group's biggest cash generator is still Hugo Boss, with a sales gain of 69 percent. The Valentino brand showed it is gaining strength with sales up 14.5 percent to €239.5 million, although there was no improvement in profitability. “Hugo Boss remains the cash cow for the group,” said Elena Sottanella, analyst with AbaxBank. “Group results were in line with expectations; the only disappointment was Valentino SpA, which showed no improvement in profitability. The company has cited the opening of directly operated stores in Asia as the cause. We will be looking closely at first quarter 2007 results to see if there is any improvement.” In the eventuality of designer Valentino Garavani's retirement – about, which rumours have been rife – Sottanella believes that the impact will be “emotional” and “short-lived”.

In terms of geographical results, Valentino FG posted double-digit growth in key markets. The Americas and European countries other than Germany and Italy saw the greatest growth, with 16.4 percent each.

www.valentinofashiongroup.com
26 March 2007

Valentino H1 profit surge, Norsa steps down

Valentino Fashion Group SpA reported a profit leap of almost 46 percent while also revealing that Valentino chief executive Michele Norsa is stepping down at the end of September. Norsa, who was with the company for nine years and was also general manager of Valentino Fashion Group’s licensed brands M Missoni and Marlboro Classics, is leaving for an undisclosed new job. He told WWD that he would “communicate” what he would be doing at a later date. For transition’s sake, he will remain a group board member for an undetermined time. Meanwhile, Valentino Fashion Group president Antonio Favrin will take over from him temporarily. Norsa has been credited with Valentino’s turnaround and the role he played in the Marzotto SpA spin-off of its fashion businesses into the Valentino Fashion Group. Norsa was, however, rumoured to be frustrated with his title as a poor reflection of his many roles within the company. The industry speculates that he could be joining an investment bank or private equity firm. It is also questioning how long designer Valention Garavani, who is now 74 years old, will remain with the fashion house he founded 44 years ago. His contract expires next summer. According to WWD, sources close the company say that chief operating officer Matteo Marzotto of Valentino SpA has begun his search for a successor. Rochas designer Olivier Theyskens springs to mind as a possibly candidate, but it is not known whether there has been contact between the designer and the fashion house.

For the six months ended 30 June, Valentino Fashion Group saw net profits rise 45.8 percent to €35 million. Group revenues gained 13.8 percent to €926 million. Favrin predicts strong sales growth for the rest of the year. Operating profits rose 19 percent to €94 million, while it reduced debt to €407 million, compared with €425 million in the same period last year. Meanwhile, revenues at Valentino climbed 18 percent to €114 million. Sales of the company’s other brands, including Marlboro Classics, rose 10 percent to €133 million. Hugo Boss revenues climbed 14 percent to €712 million. On Tuesday, the company also launched Valentino.com, its new web shop. The venture is in partnership with Neiman Marcus Direct, and is only available in the US and Canada. The site will sell pieces from the fall 2006 ready-to-wear collections, Valentino Roma and Valentino R.E.D. collections, as well as sunglasses, bags, shoes and fragrances.

www.valentino.com
1 August 2006

Valentino sees 2005 profits rise

The Italian Valentino Fashion Group has reported an 11.4 percent rise in net consolidated sales for 2005. Group sales rose to €1.73 billion (£1.19 billion), up from €1.55 billion the year before. Growth was mainly due to strong sales at subsidiaries Hugo Boss and Valentino.

Sales improved across the board and in all market, particularly the US with a 12.3 percent increase and Asia with a 31.8 percent rise. Chinese sales soared with a 65.9 increase, while the Japanese market saw sales rise 47.4 percent – thanks in part to the acquisition of Valentino Boutique Japan.

The European markets also saw positive results with sales growth of 8.9 percent in the challenging German market, a 12.5 percent sales growth in France, 22.4 percent in Spain, a 20.6 percent rise in the Scandinavian markets and an increase of 16.8 percent in Russia and Eastern Europe.

Operating profit for the year was €195.2 million, an increase of 14.8 percent from 2004. The consolidated net profit, which included profit attributable to minority shareholders, amounted to €143.2 million, a significant increase of 42.9 percent. This growth was boosted by a sales increase of 12.1 percent at Hugo Boss to €108.2 million and an increase at Valentino of 22.9 percent to €20 million.

The Valentino Fashion Group posted a net profit was up at €90.5 million from €58 million last year, signifying a 56 percent increase.

At the end of 2005 the group employed a workforce of 9,844, up from 8,903 at the end of 2004. The increase in this number was, for about 60 percent, a result of growth in direct retail.

The first two months of 2006 saw the group's growth trend continue with sales up 11 percent to €421 million. Sales growth for the year is expected to be in line with the first two months of the year, thanks to a backlog in orders and anticipated development in direct retail.

Management expects to improve operating and pre-tax profits thanks to the strong start to the year and the “expected evolution of margins and costs structuring during the year”.

www.valentionfashiongroup.com
27 March 2006

Valentino goes graphic

Valentino showed an oasis of black, colour and print at his prêt-a-porter show in Paris last week. The Roman couturier's prints were taken from his collection of paintings by the late American artist, Jean-Michel Basquiat, who's collages were translated into multi-coloured, skintight jeans, mink and silk stoles and sequined tops, while Robot and Faces from other paintings featured on strapless party-dresses and embroidered knits

After declaring that "black is the sexiest colour of all", Valentino opened his show with 20 models, all in black and cream, in variations on the smart, well-tailored, suited silhouette that delights his customers the world over.

6 March 2006

Valentino Fashion Group Q3 results

The newly formed Valentino Fashion Group, spun off from Marzotto SpA, has reported an increase in net consolidated sales of 11 percent to €570.7 million (£383.7 million) compared with €513 million in the same period last year. The fashion and luxury firm's operating profit reached €115.2 million, a 13 percent increase from €102.1 million last year. This is the first time the Group has released its results since its partial proportional demerger from clothing business Marzotto in July of this year. For a complete view of financial results the Group's board has allowed for comparisons with results before the demerger.

Pre-tax consolidated profits for the third quarter increased 17 percent to €112.4 million, compared with €96.3 million in the same period last year. Net profit for the quarter amounted to €52.0 million, compared with €40.6 million in 2004. The Group's free cash flow in the period amounted to €63.2 million, up from €15.9 million last year. The Group owns some of the world's most renowned brands, including Valentino, Hugo Boss and M Missoni.

www.valentinofashiongroup.com
14 November 2005

Valentino posts strong H1 results

The Valentino Fashion Group has posted strong first-half results thanks to vigorous sales of its Valentino and Hugo Boss brands. The group, which is a new Marzotto subsidiary with two major fashion labels, posted an increase in net profits of 9 percent to €18 million (£12.1 million), from €16.5 million the previous year. Group sales climbed 11 percent from €731 million to €814 million.

Sales at Valentino climbed 20 percent, while Hugo Boss saw them rise 13 percent. Together they caused a 20 percent increase in operating profits for the Valentino Fashion Group, up to €79 million. The Group invested €37 million in the first half, which went towards the opening of new stores and the expansion of the Swiss Hugo Boss branch. It also used the investment to update its computer system. During the same period last year, the Group invested €26 million.

The Group managed to reduce its debt to €424 million at the end of the period, down from €478 million the year before. In July of this year, Marzotto completed the spin-off of its more profitable labels like fashion house Valentino, a majority stake in Hugo Boss AG, and licenses for Marlboro Classics and M Missoni into a specially created subsidiary. The two companies, Marzotto and Valentino Fashion Group, trade on the Milan stock exchange.

Net profits at Marzotto's textile division climbed to €12.2 million in the first half, compared with a loss of €5.7 million in the same period last year. The division posted a sales decline of 7 percent to €147 million as opposed to €159 million in the same period last year.

www.marzotto.it
13 September 2005

Star bright

Italian designer Valentino has been dressing the stars for decades and now it is his turn to be put in the spotlight. He will be honoured with a Superstar gong at the 22nd Fashion Group International's Night of Stars in October.

Barney's creative director Simon Doonan will host the ceremony, themed "The Romantics". Fellow honourees include designers Olivier Theyskens, Alberta Ferretti and Ralph Rucci. Also receiving an award are make-up artist Pat McGrath and architect William McDonough. And even The Donald (Trump) will be recognized for being a visionary business leader. What he is doing in the category "The Romantics" is a mystery, although hopefully is wife Melania will know.

11 July 2005

Valentino floats

Since Friday last week Italian fashion house Valentino is a public company, listed on the Milan stock exchange. The move by its owner, Marzotto, is an indication of the difficulties that face the textiles business following the influx of cheap products from China and other low-wage countries.

The floating of an Italian fashion house is, in itself however, a rarity. The main difference between Milan and Paris has always been that the Italian houses remained in private hands, while their French counterparts went to the stock market, either on their own or as part of a luxury conglomerate.

But times are changing. Fendi and Pucci have been claimed by French luxury concern LVMH and rival PPR has bought up Gucci. And now a major Italian house has ventured forth into unknown territory as a public company.

www.valentino.com
5 July 2005

Valentino control in Japan

The Italian fashion house Valentino, which is owned by the textiles and clothing company Marzotto, is approaching the end of its battle to gain control over distribution in Japan. Valentino generated EUR30 million (GBP 26 million) in sales in Japan alone. The company has signed an agreement with Mitsui, Aoi and Sann Frere, its Japanese partner, to purchase the majority of its Japanese subsidiary, Valentino Boutique Japan. It will accomplish this through a capital increase.

Valentino Boutique Japan was founded in 1974 by Valentino and its three local partners. At present, the company runs five stores and 20 in-store shops in Japan. Mitsui will keep a minority stake in the company. Head of Valentino, Michele Norsa, revealed that the acquisition would allow the company to stimulate growth by reducing the price differences between Italy and Japan. Furthermore, the company is planning on restyling the Valentino shops and repositioning the brand in Japan.

Japan is Valentino's third largest market in sales, following the US with 40% and Italy with 27% market share, respectively. The company's aim for next year is to generate 14% sales in Japan. At present, Valentino's production takes place exclusively in Italy. However, the production of certain items, like men's jackets, is being tested in Egypt. The company expects sales to grow by 10% to EUR165 million this year, with operating profit expected to double to EUR 12 million.

www.valentino.com
21 December 2004

Couture is the word

Haute Couture houses like Valentino and Emanuel Ungaro have recently been suffering along with the rest of us. The economy has not been kind. Houses like Versace and Ungaro have cut couture shows. However, with the recent restructuring of Valentino, the Italian fashion house may post its first profit in years in 2005.

According to chief executive of Valentino, Michele Norsa, haute couture is a valuable instrument of marketing and communications to its clients. Although the production costs of hosting a couture show my be a strain on the budget, the shows are what lure the high paying clients in. He told reporters that as long designer Valentino is still designing for the house, the couture business will be kept intact.

A couture dress can cost hundreds of thousands of pounds. This is frightening but true. Norsa revealed that several bridal dresses in the couture collection this year were sold for astronomical amounts between GBP 217,000 and GBP 290,000. Most recently Valentino designed the wedding dress for Princess Lavinia Borromeo, who married Fiat heir John Elkann earlier this year.

Couture dresses are also famously worn by celebrities on the red carpet. This is the best sort of free publicity for the couture houses. When big names like Gwyneth Paltrow and Charlize Theron sparkle in exquisite dresses, the world is their witness.

To support the business of couture Norsa brought down the prices. Furthermore the company launched a sporty line called R.E.D. earlier this year. Next year will see the introduction of a new Valentino perfume. Norsa also hopes to boost sales by introducing eyewear and watches to the R.E.D. line. He is also planning to move carefully into the emerging markets like China and India.

www.valentino.com
24 November 2004

Valentino presents R.E.D. in Milan

Golden oldie Valentino presents its new line for young people R.E.D. in Milan this week and is getting ready to move on to Europe in July. The first collection will debut in selected outlets and will land the U.S.A. next year.
Valentino 'himself' commented: "We start with the most famous outfits of my collection, together with my creative team I have created a collection identifiable with R.E.D., that stands for "romantic", "eccentric" and "dressing". It is eccentric because it is inspired to a new bizarre but creative fashion typical of England, but it is also poetical. When I think at an ideal testimonial for this collection, I can only think of Kate Moss, she perfectly represents this mood".
R.E.D Valentino was conceived for girls from 18 to 30, who can mix outfits inspired on legendary items such as the coat with V logo or wear one fastened at the waist with a satin ribbon, but she could also choose the new creations of the brand. R.E.D. Valentino offers young people the chance of approaching the glamorous, charming and excellent creativity of Valentino through lower prices.
Italy's Vicenza company (holding Victor Victoria and cooperating with brands such as Jean-Paul Gaultier, Moschino and DKNY) will manage production and distribution of the new collection. Talking in economical terms, the outfits will have an achievable target, according to the intentions of the Company that nowadays is part of Marzotto Group. "I have no doubt, it will be surely a success" explains Michele Norsa, Managing Director at Marzotto Group. The financial goal forecasts a 300 million euros in five years and a 15 millions investment in advertising.

March 4, 2003
www.marzotto.it

Valentino goes sporty

The sporty wind that is blowing through the fashion world is also felt by seventy year old topdesigner Valentino. Naturally, the Italian fashiondesigner, renowned for his elegant evening dresses and feminine designs can't stay behind. He designed a casual sportswear collection for the autumn/winter 2003 show. This new collection will be revealed in January 2003. Its name will be kept secret for now, but the line is expected to be positioned at the smarter end of the casual sportswear market.

"In terms of pricing, the new range will compare to the likes of Dolce and Gabbana and some Ralph Lauren lines," said Valentino's chief executive, Michele Norsa. It appears to be a succesful year for Valentino. Next spring, he launches a new line of watches. New stores are planned for Madrid, Taiwan, Singapore, Malaysia and the Middle East next year.

In May of this year Valentino was sold to the Italian textile and fashion group Marzotto for GBP 146 million.

December 18, 2002
www.marzotto.it

Marzotto acquires Valentino from HdP Group

Marzotto S.p.A. has signed the preliminary agreement for the acquisition of the entire capital of Valentino S.p.A. from the HdP Group, on the basis of an enterprise value of € 240 million, of which € 204.4 million of net financial debt as of the 31 st December 2001 and € 35.6 million of equity value.
The execution of the agreement is subject to the authorisation of the competent antitrust authorities.

Valentino's core business is in the haute-couture, ready-to-wear and luxury accessories sector, both directly and through licensees. Valentino is present in all the main markets for luxury goods through directly operated stores, franchisees and shop-in-shops in the most prestigious department stores. Total brand sales at retail prices are in excess of € 500 million.

Valentino entered into the history of fashion thanks to the extraordinary creative and artistic talent of its founder Mr. Valentino Garavani. Marzotto intends to continue the development of the brand's potential, ensuring optimal conditions to achieve a profitability in line with that of the best players within the luxury sector.
In 2001 the Valentino Group recorded sales of € 132.0 million, a gross margin of €82.5 million and a net loss of € 28.5 million. The net loss is mainly due to brand amortisation and financial charges. Marzotto believes it can achieve a drastic improvement in the results over the next two years and bring the Valentino Group to a positive net result as early as 2004.

The acquisition will have no negative impact on the profitability of the Marzotto Group as the losses posted by the Valentino Group during the turnaround period will be off-set with the capital gains which are expected to arise from the disposal of non strategic assets.
Marzotto will finance the acquisition of the shares and the repayment of Valentino's net financial debt mainly with the proceeds of the above mentioned disposals and, for the remainder, with internal resources. Marzotto will not increase its capital nor will it change its dividend policy as a consequence of the acquisition.

Mr. Antonio Favrin, Vice Chairman and CEO of Marzotto, said: "Valentino complements perfectly the Marzotto brand portfolio, which already includes, among others, Hugo Boss, world-wide leader in menswear, and the Marlboro Classic, Gianfranco FerrU Studio and M Missoni licenses. Furthermore, the integration allows Marzotto to strengthen its presence in the luxury and retail sectors.

27 March 2002
www.marzotto.it