Fashion House Roberto Cavalli Closes its U.S. Stores
The ailing Italian luxury fashion house Roberto Cavalli has shuttered its North American operations, hours after the brand said it was seeking a deal with creditors to stave off a bankruptcy filing and less than a week after the departure of its creative director, Paul Surridge. On Friday, the brand confirmed that it intended to file a plan with Italian courts that would allow the business to keep running while it secured new investors or ownership. The fashion house, headquartered in Florence and famous for its flesh-baring, flamboyant designs, has fallen from favor with its fan base in recent years, struggling to turn around falling sales and to maintain its profile in an increasingly competitive global luxury market dominated by the major conglomerates.
Employees in eight Roberto Cavalli stores and four outlets in the United States are out of a job, and several high-ranking executives based in the U.S. resigned. A Cavalli spokesman confirmed Monday that Art Fashion Corporation, the name of the brand’s North American subsidiary, would liquidate under Chapter 7 of the United States bankruptcy code by April 4 as part of a restructuring effort.
Total Retail's Take: The consolidation seen in the global luxury fashion market in the last 12 months — Michael Kors acquired Versace, Richemont acquired Yoox Net-A-Porter Group — coupled with the other major conglomerates in the space, LVMH and Kering, has ramped up the level of competition for independent players such as Roberto Cavalli. In addition to bigger, stronger players in the space bolstered by consolidation, they're competing for a shrinking share of consumer spending, even while the ranks of the wealthy rise. Goldman Sachs dropped its 2019 forecast for luxury industry sales growth from a previous 7 percent to 5 percent. These factors combined contributed to Roberto Cavalli's struggles in the U.S., and its eventual withdrawal from the market.
