L Catterton, the private equity fund co-founded by luxury conglomerate LVMH, is taking steps to further revive the historic Italian luxury house, Etro. The brand was acquired by L Catterton just over two years ago, and now the company is planning a recapitalization to inject fresh financial resources into the brand. In order to support Etro’s significant investments, L Catterton will finance a capital increase of €15 million.

This news has been officially confirmed by Etro, as reported by MF Fashion. The brand stated that the equity reinforcement intervention by L Catterton aligns with the revival project that began in December 2021. Under the leadership of CEO Fabrizio Cardinali, Etro has undergone a profound organizational transformation over the past two years. This includes process reengineering, strategic repositioning, and the introduction of a new aesthetic direction led by Creative Director Marco De Vincenzo. Additionally, the brand has dedicated efforts to refining its product offerings, cultivating its image, improving digital engagement, and enhancing supply chain management and distribution networks.

Despite these positive changes, Etro still has a long road ahead. About a year ago, Cardinali set a goal of reaching €500 million in the next five years. In 2022, the brand’s turnover increased by 17% compared to the previous year, reaching €277 million. The brand achieved operational profit for the first time since the onset of the COVID pandemic, with positive EBITDA of €9 million compared to 2021, and €25 million compared to 2020.

However, Etro also incurred a substantial loss of €23.6 million in 2022. The brand explained that this loss was primarily due to the impact of amortization and extraordinary expenses but noted that there was a clear improvement compared to the previous fiscal year.

With the recapitalization and the support of L Catterton, Etro is confident in its ability to continue its revival and achieve its ambitious goals. The infusion of fresh financial resources will enable the brand to make further investments and strengthen its position in the market. Etro remains focused on its strategic plan and aims to leverage its strong brand identity to drive growth and success in the luxury fashion industry.

Useful links:
Etro Interview with ietf
Etro CEO’s outlook for 2022