Valentino in Talks With Banks as Luxury Drop Prompts Debt Breach

Core Viewpoint - Valentino SpA is facing financial difficulties due to a slowdown in luxury goods demand, leading to a breach of its debt covenants and discussions with creditors [1][2][3]. Financial Performance - Valentino reported a 2.8% decline in revenue to €1.31 billion in 2024, with EBITDA falling 21% to €248 million, attributed to reduced wholesale revenue and a slowdown in European and Chinese markets [6]. - The company's net debt, including leasing liabilities, stood at €1.08 billion as of December 31 [6]. Debt and Credit Situation - Valentino is seeking relief on its covenants after its debt-to-earnings ratio exceeded the threshold set in its credit agreement [2]. - The company breached its covenants for the first time in December, with performance worsening significantly in the first half of 2025 [3]. - The bulk of Valentino's debt consists of a €530 million ($619 million) financing from a consortium of banks, with specific net debt-to-earnings ratio requirements [4]. Ownership and Strategic Moves - Valentino is owned by Qatar's Mayhoola for Investments and Kering SA, which acquired a 30% stake in 2023 and extended an option to buy the remaining shares until 2029 [5]. - Kering's investment aims to reduce its reliance on Gucci, which has been struggling [5]. Management Changes - Valentino has undergone management changes, appointing Riccardo Bellini as CEO in September [7].