MONTE CARLO — At the Financial Times Business of Luxury summit held in Monaco in June, perhaps the most eye-opening and timely presentation came from Maurizio Castello, Head of KPMG Advisory fashion and luxury practice in Milan.
In a white paper published to coincide with his presentation, Castello writes: “Many luxury goods companies are in the grip of a double crisis. A declining economy has hit sales, while a financial credit crisis has made debt difficult to raise and service. The result is that many luxury companies find themselves in a liquidity crisis that requires urgent remedial action to survive.”
Several major “well-known names” from the world of Italian luxury are teetering on the edge of insolvency, according to Mr. Castello. Some of these troubled businesses are heavily burdened by debt that was used to finance rapid international expansion and product line extensions.He added: One recent example was the investment in Valentino Fashion Group by Permira, which put in a huge amount of money to take a stake in the company at a very high valuation
by Imran Amed, courtesy of Luxury Society
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