Valentino, the renowned Italian luxury brand, has been significantly impacted by the Covid-19 pandemic. The company has reported a net loss of 127 million euros for the year 2020, a stark contrast to the 22 million euros in earnings it achieved the previous year. Like many other brands in the industry, Valentino has had to contend with obstacles such as reduced travel and store closures, which have ultimately led to a decrease in revenue by 28%, totaling 882 million euros.
The company’s EBITDA, which measures earnings before interest, taxes, depreciation, and amortization, also experienced a sharp decline, plummeting by 51% from 298 million euros in 2019 to 146 million euros in 2020. The first half of the year proved to be particularly challenging, as EBITDA fell by 75% to 39 million euros compared to the same period in the previous year. However, there was some improvement in the second half, with an EBITDA of 107 million euros, indicating a decline of only 25%.
Valentino’s EBIT, representing earnings before interest and taxes, resulted in a loss of 119 million euros in 2020. Adjusted EBIT, which excludes the economic effects of impairment testing, also showed a loss of 62 million euros. The closure of flagship stores across the globe contributed to an impairment cost of 57 million euros.
Despite these financial setbacks, Valentino remains hopeful and sees the current situation as an opportunity to invest in creativity, human capital, and personalized experiences for its customers. In 2020, the company underwent management changes with the appointment of CEO Jacopo Venturini. Valentino has also focused on enhancing its digital communication and integrating omnichannel strategies to adapt to the changing market landscape.
In line with its strategic decisions, Valentino recently announced the discontinuation of its diffusion line, REDValentino, which is set to cease production and distribution by the end of 2023. Moreover, the brand has pledged to discontinue the use of fur. As part of its restructuring efforts, Valentino will be closing its Valentino Polar factory in Milan, which it acquired in 2017 and had employed 43 individuals.
The luxury brand’s ability to navigate the challenges posed by the ongoing pandemic and successfully implement its plans for recovery and growth remains to be seen. However, Valentino’s unwavering commitment to creativity and providing exceptional customer experiences is expected to play a pivotal role in its journey towards regaining financial stability in the luxury market.
Useful links:
1. Business of Fashion
2. Luxury Daily
