Tuesday, 19 May 2020

Elisabetta Franchi generates €120 million revenue in 2019, stock market listing on hold

Last year, Italian label Elisabetta Franchi heralded its intention to list on the Milan stock exchange, a project that is now on hold due to the Covid-19 pandemic.

 For the first time, the women's ready-to-wear labeled by the eponymous designer has published its consolidated results, confirming the growth trend observed in the last three years. In 2019, Elisabetta Franchi recorded revenue of €120.4 million, up 4.7% over 2018, and a net income of €14.7 million, down 2.2% compared to the same year.

EBITDA was €23.5 million (up 5.2% over 2018) and operating income reached €21.6 million (up 8.8%). The label's net cash position was €11.3 million, an improvement over the €9.3 million recorded a year earlier.

The growth of Elisabetta Franchi's revenue was chiefly driven by the expansion of its direct retail network, whose sales rose by 7.7%. In a press release, the label underlined the remarkable sales increase generated by its mono-brand stores in Italy (whose sales were up 10.5%) and its Parisian flagship (up by 22.5%), as well as the boom in e-tail sales, which rose by 60.6%, growing from €3.1 million in 2018 to €8.3 million a year later.

The results of the wholesale channel, which at €89.4 million accounted for three-quarters of Elisabetta Franchi’s total revenue, improved by a mere 0.7%. Notably, over half of the label’s wholesale business (€50.6 million) was generated in Italy. In 2019, a positive domestic market performance (sales were up 6.7%) enabled Elisabetta Franchi to compensate for the slump in overseas revenue, which suffered chiefly for the Hong Kong pro-democracy demonstrations and the shrinking of the Russian market.

In September 2019, Elisabetta Franchi began to prepare for a stock market flotation. The plan was to do so via a special purpose acquisition company (SPAC), set up specifically for the listing. The company, called Spactiv, is led by Maurizio Borletti, currently the president of Grandi Stazioni Retail, which operates the retail concession areas inside Italy’s main railway stations.

In February, due to the Covid-19 crisis, Spactiv’s shareholders did not give the green light to the acquisition of Elisabetta Franchi, prior to its listing. However, those shareholders who still wish to go ahead with the operation have the possibility of increasing their stake in Spactiv by June 12, taking over from investors who prefer to opt-out. Once the acquisition will eventually be approved, three to four months will still be needed to finalize the flotation. Elisabetta Franchi herself will hold a majority stake.

According to rumors, former Prada, Givenchy, and Valentino director Sebastian Suhl could take the helm of Elisabetta Franchi once the operation will be concluded.

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