Valentino Sees Sales Climb 10% Despite ‘Shaky’ China

Italian luxury brand Valentino has seen sales rise thanks to its directly-owned stores.

As Reuters reported Monday (April 24), Valentino enjoyed an 18% increase in core profit for last year, with sales climbing 10% at constant currencies.

The company said sales in the shops it controls directly rose twice as fast as overall revenue, while its wholesale revenues fell 6%.

“Geographically speaking, Europe, North America, and the Middle East lead the way, while Greater China was still shaky tied to Covid,” the company said, per Reuters.

Valentino’s statement adds that it has been “reducing the wholesale activity to focus only on a selected partnership distribution.”

This shift comes at a time when wholesale inventories have begun piling up, per recent Census Bureau figures.

“The wholesale inventories might be viewed as a harbinger of things to come,” PYMNTS wrote earlier this month. “Wholesalers sell products in bulk, as goods end up on retailers’ shelves and on showroom floors. The merchants, of course, then sell the goods — whether a shirt or a case of wine — to end consumers.”

The fact that wholesale channels have been building up could indicate orders from at least some consumer-facing businesses have slowed, we noted, which could signal that merchants are trying to clear shelves, and could move to mark down items to make that happen.

Meanwhile, Valentino’s “shakiness” in China is happening as a number of other luxury brands are crediting that country’s relaxation of its pandemic restrictions for an increase in sales.

Among them is LVMH, which on Monday became the first European company with a market value higher than $500 billion. It’s a milestone the retailer reached weeks after reporting strong sales driven in part by China’s reopening.

Those sales jumped 17% during LVMH’s  first quarter, defying expectations and leading CFO Jean-Jacques Guiony to say the company was “extremely optimistic” about its prospects in China during 2023, adding that the earnings “bode well for the rest of the year.”

Rival luxury brand Hermes has also noted strong consumer demand for its products in China in the closing quarter of 2022, even with the pandemic restrictions.

“[We] continued to see strong desirability in China,” Hermès Executive Chairman Axel Dumas said in a February interview with Reuters. “We saw things going very strongly in China with double-digit growth … including in the fourth quarter.”

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