Valentino May Be Profitable in 2010; Permira Still Committed, Sassi Says

Valentino SpA, the Italian fashion house owned by Permira Advisers LLP, may become profitable this year should it maintain sales growth at the pace of the first half, Chief Executive Officer Stefano Sassi said.

Revenue at the Milan-based company increased 11 percent to 12 percent in the opening six months of 2010, Sassi said yesterday in an interview in Paris.

“If we are moving ahead at this speed and the economic situation is fine, we can reach good results very soon,” Sassi said. Earnings before interest, tax, depreciation and amortization “could be positive” this year, he said. The CEO declined to give a sales forecast, citing economic uncertainty.

Permira led a 5.3 billion-euro ($6.66 billion) buyout of Valentino Fashion Group SpA, owner of the eponymous brand and licenses for MCS Marlboro Classics and M Missoni, in May 2007, before the recession sapped luxury goods sales. The private equity company is “still far away from” exiting its investment and is “very committed to supporting us,” Sassi said.

Valentino Fashion posted a loss before interest, tax, depreciation and amortization of 4.4 million euros in 2009, compared with earnings of 38.6 million euros on the same basis a year earlier, Sassi said. Revenue declined 11 percent in the year to 464 million euros, with sales of the Valentino brand down 9 percent to 238 million euros, he said.

U.S. Department Stores

Valentino ready-to-wear apparel, which was “very, very well accepted” by wholesalers and retailers, led the growth in first-half sales, followed by accessories, Sassi said. Clothing sales more than doubled in U.S. department stores, while shoes “are performing in an outstanding way,” the CEO said. At some North American retailers, Valentino footwear is “just after shoe specialists in terms of performance,” Sassi said.

After the U.S., sales in the six months through June grew “very well” in Asia, particularly Hong Hong, Sassi said, without being specific. European revenue recovered slowly at the start of the year and accelerated from April, he said.

Creative directors Maria Grazia Chiuri and Pier Paolo Piccioli have broadened Valentino’s offer to include more items that sell for less than 1,000 euros to attract a younger consumer and break “a little bit this perception of always the old Valentino eveningwear,” Sassi said.

“This is the basis for a customer development that we think will benefit in the next years,” the CEO said.

January’s introduction of 290-euro limited edition t-shirts at Paris-based retailer Colette is among strategic initiatives that are boosting sales, Sassi said. Valentino plans similar local activities in the second half of this year, including temporary “pop-up” stores in Asia, he said.

New Customers

Valentino is also seeking new customers for custom-made evening gowns, the fall 2010 collection of which will be shown in Paris this evening, Sassi said. In the last two seasons, the company, which dressed Chloe Sevigny at the Golden Globe Awards, added at least 10 customers to its haute couture client list, mainly from the Middle East and Eastern Europe. First-half orders for the dresses, which sell for as much as 40,000 euros, rose and compared well with expectations, Sassi said.

“There is a more positive attitude,” the CEO said, without specifying the growth.

Although couture represents only 2 percent to 5 percent of Valentino sales, it’s “a major communication tool” for showing brand creativity and “developing the dream,” Sassi said.

To contact the reporter on this story: Andrew Roberts in Paris at aroberts36@bloomberg.net.

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