Designer Dish. Roberto to Finally Sell Minority Stake in Cavalli Company

June 5, 2009 • Fashion

Roberto Cavalli backstage of his Fall 2009 show

After an extended period of going back and forth on whether to sell a piece of his empire or not, Italian designer Roberto Cavalli announced last week he would in fact not be selling to a private equity fund; only to follow up with a statement this week saying he was. So, for the moment at least, plans are being made for the designer to sell a 30 percent share of his company to Milan-based equity fund Clessidra SGR. WWD reported that Cavalli himself had signed a letter of intent yesterday for a deal that could be finalized as early as September.

This deal could seemingly benefit Cavalli's label, which has been in financial trouble since last year, by helping to develop the brand without using any more banks. Cavalli already owes a short term debt sum of 21 million euros, or $30.8 million to several banks globally. The designer saw a drastic decrease in his sales, net profit, and personal earnings from 2007 to 2008 and is still trying to recover from the financial blow. The cause of the plummeting sales and net profit can be attributed to the failing economy which has been hitting both high end and regular retailers round the world. A Cavalli balance sheet obtained by WWD stated the company was, "marked by an uncertain global economy that morphed into a real
financial and economic crisis in the second half of the year. While having a high-profile customer, (the firm) is not immune to the
contraction of consumer demand globally, which has extended to all
product categories and geographical markets.”

Cavalli himself, however, claims that the reason his earnings dropped was due to the lack of royalties that were paid to him by Ittierre, the production and distribution company that handles his Just Cavalli contemporary line. Ittierre filed for the Italian equivalent of Chapter 11 bankruptcy
protection this past February. Just Cavalli is Ittierre’s biggest license,
generating 2007 revenues of about 240 million euros, or $329 million.
Other Ittierre licenses include C’N’C Costume National, Galliano, VJC
Versace and Versace Sport
. Cavalli has claimed he was owned 20 million
euros, or $26.5 million, in unpaid royalties by the bankrupt company.

pieces from Just Cavalli

Hopefully, these new arrangements of involving the stake sale will provide the foundation for the Cavalli company to get back on it's feet. The tone of the label in discussing it's future plans is indeed optimistic. The WWD report claims that the company has upcoming plans to expand to countries where the label is not widely present, while maintaining and consolidating sales with existing clients.

Article and Photo Source: WWD

-Alia Rajput

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