After last Friday, March 29th the Board of Directors of Roberto Cavalli fashion maison approved the presentation of a so-called blank settlement request to the Court of Milan as expected (see here a previous post by BeBeez), during the weekend the US subsidiary, ArtFashion Corp, due to a hard liquidity crisis, asked for the admission to the Chapter 7 procedure (liquidation agreement) and the immediate closure of all US activities, WWD reported.
On the evening of March 29th all the Cavalli sales points based in the Usa (seven directly operated stores, a corner and four outlets) were closed and e-commerce in the US was suspended. All 93 employees were sent home and the US subsidiary ceo, Salvatore Tramuto, resigned. The US market represents 17% of the consolidated revenues of the fashion brand.
Roberto Cavalli had reached 152.4 million euros in revenues in 2017 (from 155.2 million in 2016) and a negative ebitda of 7.1 millions (even if in clear improvement compared to -26.2 millions in 2016) and with a net loss down to 33.6 millions (from 55.2 million). Year 2018 is said to have closed with an increase in revenues to over 160 millions, but the operating result have been a negative 35 millions (from -45 millions in 2017). The information memorandum circulated by the advisor Rothschild for the sale of the brand assumes for 2019 a slight contraction of turnover, at 155 million euros, a negative gross operating margin of 20 million and an operating result again deteriorating to – 45 millions. At the end of 2018 the group’s bank debt was around 35 million.
The fashion maison has been controlled by Italy’s private equity firm Clessidra sgr since 2015, joined with minority shares by the L-GAM fund and by Chinese Chow Tai Fook Entreprises Ltd, a Hong Kong-based holding company controlled by the Cheng family. The deal was then made on the basis of an enterprise value of 380-390 million euros, for a multiple of about 16x the 2014 ebitda, which was around 23 million euros, against revenues of 210 millions. Subsequently the funds have recapitalized the company for a total of another 15 million euros.
The only bod left on the table today for Cavalli is said to be the one by US Bluestar Alliance, which would have put on the plate over 100 million euros between capital increase and purchase of brands.