Valentino SpA Faces Financial Struggles Amid Luxury Market Slowdown
By Bloomberg
Published: September 26, 2025
Valentino SpA, the iconic Italian fashion house, is currently engaged in discussions with its creditors following a significant downturn in demand for luxury goods. This decline has led to a breach of its debt covenants, as reported by sources familiar with the situation. The luxury sector, once a bastion of resilience, is now grappling with economic uncertainties that have forced consumers to rethink their spending habits.
Economic Pressures on Luxury Brands
The luxury market has been under pressure for several months, primarily due to rising tariffs and a general sense of economic instability. This has resulted in a noticeable shift in consumer behavior, with many opting to cut back on high-end purchases. Valentino, renowned for its signature Rosso Valentino crimson, first encountered covenant breaches in December 2024, but the situation has worsened significantly since then. The company reported a decline in earnings during the first half of 2025, highlighting the challenges it faces in a contracting market.
Debt and Financial Obligations
Valentino’s financial troubles are compounded by its substantial debt load, which includes a €530 million ($619 million) financing package secured last year from a consortium of banks, including Intesa Sanpaolo SpA, Banca Monte dei Paschi di Siena SpA, Banco BPM SpA, and BNP Paribas SA. This financing agreement, signed in July 2024, mandated that Valentino maintain a specific net debt-to-earnings ratio, which is evaluated biannually. As of now, the company has surpassed the threshold set in its credit agreement, prompting the need for negotiations with creditors.
The Impact of Market Dynamics
The luxury sector’s contraction is not an isolated incident. A report by Bain & Co. released in June projected a decline in the luxury market of between 2% and 5% for the year. This downturn is particularly evident in key markets such as Europe and China, where Valentino has seen a reduction in wholesale revenue. The company reported a 2.8% drop in revenue to €1.31 billion in 2024, with earnings before interest, taxes, depreciation, and amortization (EBITDA) plummeting by 21% to €248 million.
Kering SA, which owns a significant stake in Valentino, initially acquired a 30% share in 2023 and recently extended an option to purchase the remaining stake from Mayhoola for Investments until 2029. This strategic move was seen as a way for Kering to diversify its portfolio, especially as its flagship brand, Gucci, has struggled to maintain profitability in recent years.
Management Changes and Future Outlook
In response to the ongoing challenges, Valentino has undergone several management and design changes over the past 18 months. Riccardo Bellini was appointed as the new CEO at the beginning of September, bringing fresh leadership to the brand during a critical time. The hope is that under Bellini’s guidance, Valentino can navigate the current economic landscape and emerge stronger.
Despite the hurdles, the luxury sector has historically shown resilience. Brands that adapt to changing consumer preferences and economic conditions often find ways to thrive. Valentino’s rich heritage and commitment to craftsmanship may provide a foundation for recovery, but the path forward will require strategic adjustments and a keen understanding of market dynamics.
Conclusion
Valentino SpA’s current financial predicament underscores the broader challenges facing the luxury industry. As the company seeks relief from its creditors, it must also contend with a shifting market landscape that demands innovation and adaptability. The coming months will be crucial for Valentino as it strives to regain its footing in a competitive and evolving sector. The luxury market may be contracting, but history shows that with the right strategies, brands can find a way to flourish even in difficult times.
