What’s the magic number in fashion these days? One billion. Yes, that’s right. It can be $1bn, €1bn or £1bn (but not ¥1bn – that’s only just over £6m,after all). Either way, it seems to be the yardstick by which the importance of a business is judged.
So it was interesting to read today that Valentino has become a $1bn-plus brand two years earlier than it expected.
Now I’ve been writing about this brand for almost two decades and have seen some real ups and downs. But throughout all that time, whether it was doing well or not-so-well, it never, ever hit the fashion influencer bullseye… until recently.
Enter Maria Grazia Chiuri and Pierpaolo Piccioli a few years back. When they took over the creative helm, they didn’t seem like they’d set the world on fire. They seemed like a couple who’d just produce beautiful clothes that rich women would love but the rest of us wouldn’t actually care about.
How wrong can you be? There’s been a lot of talk lately about Alessandro Michele driving the boho-meets-romantic-meets-mash-up trend. But MGC and PP got there first. Their style is a little less mashed than Michele’s, but it’s a style that’s hugely influential.
And in an age when secondary lines are being cancelled/consolidated by luxury firms, Valentino is going its own way. The MGC/PP influencer umbrella effect also reaches to Red Valentino (and hey, even I can afford that, albeit 18 months later when the clothes appear on discount site yoox.com!)
WWD reported this morning that revenues rose 48% last year. Wow. They reach €987m or a billion-plus ($1.09bn) in dollar terms, which means they’re going to top a billion euros too some time soon because double-digit growth is predicted to continue this year.
CEO Stefano Sassi said that when Qatari-based Mayhoola for Investments took control of the company in 2012, turnover was €370m and the team had a goal of €1bn in five years.
“The one-billion figure is symbolic; we have arrived at a dimension and critical mass that the brand did not have, with significant cash and profitability,” he said.
It’s a shame we won’t have a chance to buy a slice of the pie before 2017 as he also ruled out an IPO before that date due to unfavourable conditions (even for power brands like this, the markets are pretty tough).
On the earnings front though, all is rosy. The company made Ebitda of €180.2m last year, up from €98.5m a year earlier.
So how did it achieve an almost-doubling in profits? Comparable sales up a storming 20%… organic growth in all markets… retail revenue accounting for 55% of sales… accessories representing half of total sales… and a growing menswear business that accounted for 10% of sales last year.
The company will continue to open new stores in a controlled way (a Bond Street, London store is due this month so I can at least press my face against the window some time soon).
Interestingly, just as the company is going against the trend with its lower-price Red Valentino line, it’s also bucking the trend with major support for wholesale. It’s increasing its presence “in top-quality boutiques,” Sassi told WWD.