L Catterton initiates recapitalization of Etro

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Nov 4, 2023

In the midst of its revival since being acquired by L Catterton just over two years ago, Etro is poised to benefit from an infusion of fresh financial resources via a recapitalization. L Catterton, the private equity fund co-founded by luxury conglomerate LVMH, which secured a majority stake in the historic Italian luxury house in July 2021, will finance a capital increase of €15 million.

Etro’s last Spring/Summer 2024 show in September – © Launchmetrics

This information, initially reported by the Milanese daily MF Fashion, has been officially confirmed by the Milanese brand. Etro has stated, “The equity reinforcement intervention by shareholder L Catterton, aimed at financing the group’s significant investments, aligns with the overarching revival project initiated in December 2021.”

Indeed, over the past two years, the brand, predominantly owned by L Catterton (60%) with the Etro family holding (40%), has undergone a profound organizational transformation under the leadership of CEO Fabrizio Cardinali. This reconfiguration included process reengineering, strategic repositioning, and the introduction of a new aesthetic direction overseen by Creative Director Marco De Vincenzo. Comprehensive efforts have been dedicated to refining product offerings, image cultivation, digital engagement, and significant enhancements to supply chain management, distribution networks, and entry into fresh market domains.

Approximately one year ago, Fabrizio Cardinali set the goal of reaching €500 million within the next five years. “It’s a challenging yet achievable target, thanks to the backing of new shareholders, the strong brand identity, and the strategic plan in place,” he stated at that time.

One year later, significant progress has been made, but there is still a long road ahead. According to figures provided by the fashion house, the 2022 turnover increased by 17% compared to 2021, reaching €277 million. The most noteworthy milestone is Etro’s attainment of an operational profit, marking its first since the onset of the COVID pandemic. The earnings before interest, taxes, depreciation, and amortization (EBITDA) posted a positive outcome, signifying a €9 million growth in comparison to 2021 and a remarkable €25 million surge compared to the figures from 2020.

However, the brand incurred a substantial loss of €23.6 million in 2022. Etro explained that this loss “primarily results from the impact of amortization and extraordinary expenses,” noting “a clear improvement compared to the previous fiscal year.”

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