Post by : Saif Rahman

The Italian fashion brand Etro is set for a transformation as its founding family divests its final minority stake. This shift introduces new investors such as Turkey's RAMS Global, leaving L Catterton, a private equity firm affiliated with LVMH, as the dominant owner.

Founded in 1968 by Gimmo Etro and celebrated for its iconic paisley patterns, the company has recently faced financial difficulties, recording a net loss of 23 million euros last year and a revenue drop from 261 million euros to 245 million euros. L Catterton, which initially acquired 60% of Etro four years ago, has since incrementally increased its share.

The investor group also features Swinger International, an Italian fashion company, along with the smaller private equity firm RSI. They not only purchased the stake from the Etro family but also contributed to a capital increase, slightly diminishing L Catterton's share to between 51% and 55%, previously around 65%. While the exact financial details remain undisclosed, insiders appraised the total deal and capital boost at about 70 million euros ($82 million).

In the new governance model, Chief Executive Fabrizio Cardinali will continue to oversee daily operations, and Faruk Bülbül, representing RAMS Global, steps in as chairman of the board. Etro has reiterated that L Catterton will play a pivotal role in nurturing the brand’s strategic growth moving forward.

This transition follows a search initiated in 2024, with Rothschild tasked to identify potential investors to stabilize Etro, broaden its global presence, and foster a creative and commercial revival.

The founding family’s exit signifies a turning point for Etro, shifting it increasingly towards global investment oversight. Despite recent profitability challenges, the entry of new investors coupled with L Catterton's ongoing support reflects a determination to revive the brand's stature within the competitive luxury fashion landscape.

With RAMS Global stepping into a leadership capacity on the board, industry analysts predict that Etro will enhance its international outreach and forge new creative partnerships. Renowned for its vibrant patterns and pioneering textiles, the fashion house aims to harmonize its rich heritage with innovative strategies from its new global investors.

This development underscores a prevalent trend in the luxury fashion sector, where brands are increasingly seeking international investments to stabilize financially while preserving their creative essence. For Etro, the road ahead will involve balancing its distinctive style with the evolving dynamics of a global marketplace characterized by shifting consumer demands and intensified competition.

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