Cavalli Own-Store Sales Rise at Least 10% Amid Cost-Cutting to Boost U.S.

Roberto Cavalli SpA, the Italian fashion house known for its animal-print designs, said sales in its own stores grew at least 10 percent in the second quarter, while wholesale orders for spring 2011 showed “a positive trend.”

“We continued to have double-digit growth in our own shops around the world, consolidating our position in North America and Europe,” Chief Executive Officer Gianluca Brozzetti said yesterday in an interview in Milan. He declined to quantify the sales increase.

Cavalli is cutting production costs to drive sales in North America, where retailers and consumers are more price sensitive than they were before the recession, he said.

“That doesn’t mean lowering prices,” the CEO said. “It’s more about getting the right product content for the right price.”

Although there is still demand for $3,000 evening dresses, selling gowns priced between $6,000 and $8,000 “is more difficult,” Brozzetti said. To keep prices under control, the company is designing products in a more cost-effective way, such as putting one brooch on a handbag instead of two, the CEO said.

“It’s the same bag,” he said. “It’s the same product. There is always a decoration. But you make it smart, and that will be appreciated by the final client who doesn’t need that extra bit.”

Recovery

The luxury goods industry is recovering from its worst year on record as demand returns in Europe and the U.S. LVMH Moet Hennessy Louis Vuitton SA, the world’s largest producer, said in April that revenue at its fashion and leather goods unit climbed 8 percent, excluding currency swings, in the three months ended March 31. Worldwide spending on luxury goods may rise 4 percent in 2010, consulting firm Bain & Co. estimates.

Department and specialty store orders for Cavalli’s spring 2011 men’s collection are showing “a positive trend,” although it’s very early, the executive said. The euro’s weakness and the sovereign debt crisis in Europe make it difficult to predict whether Cavalli’s revenue growth will continue at the same pace in the second half of the year, Brozzetti said.

“Clients stop buying when there are events like that so we have to watch out,” Brozzetti said. “We continue to be realistic, cautious and careful.”

The Florence, Italy-based label, expects second-half revenue to benefit from a major program of events to celebrate the company’s 40th anniversary, such as special limited-edition products, Brozzetti said.

To contact the reporter on this story: Andrew Roberts in Milan at Aroberts36@bloomberg.net.

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