What is happening with Roberto Cavalli?

In April, a Milan court granted ailing Italian luxury fashion brand Roberto Cavalli creditor protection with up to 120 days to present a turnaround plan. At the end of March, The Art Fashion Corp, the business that operates Cavalli's North American operations, filed for bankruptcy, locally known as Chapter 7, after the brand’s majority owner, private equity firm Clessidra, found itself unable to inject more money into it and failed to sell its 90 percent stake.

According to new documents presented at the end of April, the company now expects to have to let go 229 of its 245 workers between 16th May and 15th November of this year. This will mainly affect those working at Roberto Cavalli’s production site near Florence. However, the Italian government has to approve the layoffs, after which employees will receive monthly compensation from the state.

Since 2013, Roberto Cavalli has been operating at a loss and in 2016, revenues declined by 13.6 percent to 155 million euros (164 million US dollars). In 2018, losses were calculated at 17.8 million US dollars, excluding marketing costs of 13 US million dollars. Except in 2015, there has been a steady loss of revenues for the past five years. FashionUnited has put together the events of this time period in a quick overview.

Roberto Cavalli has been in talks with potential buyers since February of this year and a few interested parties have come forward: US brand management company Bluestar Alliance has offered to buy the company for five million US dollars and inject 105 million US dollars; German fashion designer Philipp Plein, together with private equity firm Blue Skye Financial Partners, has offered 90 million euros for a 70 percent stake in the company and Italian group OTB, owner of brands such as Marni and Diesel, offered to invest 70 million euros as part of a plan to secure 164 million euros in funding.

According to a Roberto Cavalli spokesperson at the end of April, the aim is now to reach an agreement to sell the company in the next 30 to 45 days. The final decision would have to be approved though as part of a turnaround plan that Cavalli has to present by the beginning of August according to bankruptcy proceedings.

Though all stores and retail operations are required to be closed in order to claim insolvency (which is the case in the US), Roberto Cavalli currently operates boutiques in Europe, the Middle East and other locations and the webshop is operating as usual. Now it remains to be seen if and when the company can convert investor interest into a sale.

Photo: Roberto Cavalli website

 

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