Roberto Cavalli is about to close all of its stores in the United States. The Italian fashion brand is circling the drain and has decided to dispose of its American activities in an effort to stay afloat.
93 forced dismissals
Salespeople were being fired in the boutiques of the Italian luxuy brand, barely a few hours after Roberto Cavalli announced the search for investors to avert its looming bankruptcy. Several directors, including American CEO Salvatore Tramuto, have resigned and the North American branch of the company will be closed down as of April 4th.
All contracts with the 93 American employees have been terminated last Friday, with one additional week of payment. The American subsidiary is called Art Fashion Corp., and it’s been loss-making for the past five years. In 2018, losses were estimated at 17.8 million dollars (15.9 million euros) with an additional 13 million dollars (11.6 million euros) of marketing expenses.
The search for new capital
While the company’s activities in the US are being liquidated, the future of the rest of the company is still very uncertain. Roberto Cavalli is currently in talks with shareholders and “parties potentially ready to inject cash in Cavalli to provide it with the resources necessary to overcome its current state of financial difficulties,” in the words of a spokesman.
Since 2015, the fashion brand has been owned for 90% by Italian private investment fund Clessidra, which is looking to withdraw from Cavalli due to decreasing turnover results. According to the NY Times, Diesel founder Renzo Rosso and designer Philipp Plein are among the interested parties, but there is no deal yet. The remaining 10% are still in the hands of founder Roberto Cavalli himself.
Protection from creditors
While the search for new capital is going on, the Florence-based fashion house wants to be protected from its creditors. The group is currently developing a restructuring plan to do that. The unions fear there will be massive layoffs, including in Europe. In reponse, the’ve taken up strike actions at the head office. Three weeks ago, the Italian unions already expressed their concern about the Cavalli situation.
To make matters worse, Roberto Cavalli recently lost its creative manager Paul Surridge. Surridge announced on Instagram that he had concluded after much thinking that the mission he had originally signed up for, had changed and entered “a new direction with a new perspective”. The designer says he now wants to focus on other projects which he had previously shelved in order to work for Cavalli. This is the second lead designer to leave the brand since founder Roberto Cavalli stepped down four years ago.
