GIAMMETTI’S PLANS FOR VALENTINO
Byline: Sara Gay Forden
ROME — The house of Valentino is facing a critical point in its 35-year history, and chief executive Giancarlo Giammetti knows it. At a time when many in such extremely well-heeled shoes might be thinking about taking it easy and enjoying the fruits of success, Giammetti says he’s working harder than ever. His objective? To brighten up the Valentino name, attract a more youthful customer without losing his traditional clients and to recast the Valentino licensing empire with new agreements that can take the company solidly into the future. Giammetti is also looking at ways to cut down the costs of the money-losing couture operation. And he acknowledges he is open to bringing in a new financial partner or seeking a stock market listing, though he won’t confirm rumors that he has already given a mandate to investment bankers Goldman Sachs in London to evaluate the company.
In his first interview following two key executive appointments at the house last month — former GFT executive and financial expert Paolo Vigitello was named general manager, and veteran fashion consultant Jaime Ravira was hired to oversee all merchandising and distribution — Giammetti sketched out his strategy.
“The big risk after 35 years is that everything you do is about polishing off the dust,” he said in his Rome offices, which overlook Piazza Minganelli, near the Spanish Steps.
“To keep an old fashion house alive, you have to be elastic and have an ear for everyone. We have to listen to the well-established ladies as well as the young crazy people,” said Giammetti, who added that being flexible with a house that does $170 million in wholesale sales a year isn’t easy.
He also said that, faced with steadily rising operating costs and the need for substantial new investments in the business, he has instructed his staff to evaluate any proposals from potential partners.
“Maybe there are possibilities to work with a partner,” he said, adding that he hasn’t as yet entered personally into any talks.
Giammetti’s overall plan is multifaceted and ambitious. He is mulling the launch of a young sportswear line for the U.S. market, he is expanding and refurbishing Valentino stores in major cities around the world, and he is thinking about launching a network of shops for the Miss V diffusion line. In a move that is sure to shake up his stable of manufacturers, Giammetti is also in the process of recasting the firm’s licensing empire, which currently encompasses some 32 licenses.
The top three licensees are Turin-based GFT SpA, which makes the women’s diffusion line, Miss V and the men’s diffusion line, Valentino Uomo; Mitsui, which holds licenses in Japan with wholesale volume of $130 million (babywear, accessories, home furnishings, sportswear, activewear and lingerie) and pays a percentage of that to Valentino, and Elizabeth Arden, which manufactures the Valentino signature fragrance and Vendetta and is coming out with a makeup line. Giammetti’s overall goal is to consolidate, creating a smaller number of license accords with bigger volumes.
“We want to increase volumes, also in order to give us more leverage to improve the product and sales,” Giammetti explained. He has just extended and expanded the lingerie license with Warnaco, which was previously limited to the U.S. and Canadian market. The new accord, which runs seven years, until 2002, will be worldwide, he said.
“I have a passion for Linda Wachner,” Giammetti added with a laugh. “She makes me sign wherever she wants.”
In reevaluating the licenses, Giammetti is paying special attention to Oliver, Valentino’s young line that has been stalled with trademark problems and insufficient distribution. The women’s line is manufactured by the Italian company Staff, while last year Giammetti gave the men’s line to GFT, taking it from the Zanella group.
He confirmed he’s in talks with Maglificio di Vignola, which produces knitwear for Ferre and Fendi, for an Oliver knitwear line. “We’ve hired Peter Arnell to rename Oliver, but we don’t have a new name yet — it just has to be somewhere between Valentino and Oliver,” Giammetti said.
While he said he’s generally pleased with Staff’s production, he’s thinking about taking over distribution of the line in-house, and this is one of the reasons for the hiring of Ravira.
Giammetti is also thinking about giving the men’s line to a smaller company than GFT.
“This is an issue. I don’t believe the product is right for them, and there will probably be a change. The company should be more like Staff, with modern techniques and modern cut.”
GFT sources confirmed the company is in agreement about giving back the Oliver line, which doesn’t fit into its strategy of focusing on diffusion collections with significant volumes. The line currently does some $22.5 million (36 billion lire) in sales a year, a figure that Giammetti would like to see grow to $94 million (150 billion lire).
In terms of the men’s wear, last year Giammetti gave the top line, Valentino Boutique — as well as diffusion line Valentino Uomo for the Central and South American market — to Italian men’s wear manufacturer Ermenegildo Zegna. GFT still produces the Valentino Uomo collection for the rest of the world, a line that brings in sales of some $50 million (80 billion lire) a year.
Giammetti admitted that these collections too will be under review.
“It would make sense to consolidate the [Valentino Uomo] business with one manufacturer, but we have to see which one can perform the best for us,” he said.
“These are lines that could also potentially be distributed by ourselves,” he added.
As for other aspects of distribution, Giammetti said Valentino plans to gear up investments in refurbishing their boutiques worldwide, spending up to $20 million over the next three years. “There is nothing that gets old as fast as a store,” said Giammetti, “and that’s the window you show to the world. We are investing an enormous amount of money in our stores, which are responsible for about 70 percent of our sales.”
Valentino just unveiled its new boutique on Via Condotti in Rome, where the top women’s and men’s lines are now sold, along with the full range of accessories. The old boutique on Via Bocca di Leone has been transformed into the house’s first Miss V shop, and its instant success has hatched a plan to launch a chain of Miss V boutiques. The shop is averaging $19,000 (30 million lire) a day, said Giammetti.
The next project will be to launch Valentino’s new New York store, which has been set for next August, Giammetti said. He confirmed a report in WWD Sept. 19 that he has taken a 9,195-square-foot space on the east corner of Madison and 65th that will carry Valentino Uomo, Valentino Boutique, Oliver and accessories.
A small shop will also be opening soon in Gstaad, while Valentino is hunting for space in Madrid.
Another project Giammetti outlined is a plan to expand Valentino’s facilities in Paris, where the house shows couture and ready-to-wear collections. Giammetti denied that Valentino is mulling a departure from its Rome headquarters, but acknowledged that the cost of moving the entire operation to Paris four times a year is expensive.
“Every time I have to move 40 people, rent rooms at the Ritz to do the fittings, all of these costs add up,” Giammetti said. Currently, the firm has only a press office in Paris.
Giammetti also lamented openly about the high price of maintaining the couture operation, which he says costs the house more than $5 million (8 billion lire) a year.
“This is a big loser,” said Giammetti. “For every dress you sell, you lose 80 percent. You cannot go on like this.”
One solution is simply not to sell the creations at all, he said.
“It is more expensive to sell than not to sell. One idea is to keep it as a laboratory, to experiment,” said Giammetti, who admitted that Valentino would never give it up altogether.
“If Valentino doesn’t have couture, he would stop designing altogether. He needs it physically, mentally, creatively. He needs to work with things that have no limits,” Giammetti explained.
As to rumors that he and Valentino, who together control the fashion house, are thinking about cashing out of the business, Giammetti shook his head.
“When we stop having fun, then it will be time to go,” he said. “Besides, I’m a workaholic.”