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The global fashion business journal

Jun 15, 20244:11am

Custo Barcelona: a solution the Italian way after a decade groping for capital

After years of agony and an erratic path, the fashion company of the Dalmau brothers has sealed an agreement with the Italian industrial group Aeffe. 

Jul 8, 2019 — 10:00am
Pilar Riaño / Iria P. Gestal

Custo Barcelona: solution at the Italian way after a decade groping for capital


More than a decade has been Custo Barcelona, ​​one of the Spanish fashion firms with greater international projection, going around offices and tables of national and foreign managers. After thirteen years of approaches (sought and not sought) by potential investors, Custo Barcelona has ended up resorting to the most obvious solution: an alliance with an industrial group in the purest Italian style. The problem? The agreement comes at an extra time for the brand and gives the new partner the power to give more gas to the firm that once captivated Julia Roberts.


The rumors in the sector had already circulated for several months, but it was last Friday when Custo Barcelona made public a license agreement with the industrial group Aeffe, owner of Moschino, among others. While the design department, led by Custodio Dalmau, will remain in Barcelona, ​​the headquarters and management of the brand (the biggest weakness of the company) will move to Italy.


Although in the past the owners of Custo Barcelona, ​​the Dalmau brothers, have negotiated with investment groups of all sizes, the agreement reached finally reproduces a very repeated scheme in the Italian fashion industry, that is, the alliance with an industrialist before that with a fund or with a company specialized in retail.





In fact, the Custo Barcelona brand would fit better on the Italian stage than in the Spanish one, because while Spain has given a model of well-run companies specialized in retail, Italian fashion stands out for its creativity and design. As explained by industry sources, if Custo Barcelona had been born in Italy this agreement would have arrived (by the will of the investors and the owners themselves) some time ago, and not when the brand is at risk.


The management has been, according to all sources consulted, the biggest problem of Custo Barcelona, ​​which has failed to take advantage of the exhibition achieved through parades in various cities, the most important of them in New York. With the agreement, the owners transfer the management to their new partner, who will be in charge of deciding the expansion strategy and investments.


“It deflated due to lack of internal management and shareholder disorder -says an investment banker who has had the sales notebook of the brand on his desk -; He did the difficult thing first, which was to approach the United States, but he ran aground on a very external fashion with a quality that he did not quite convince, and he allowed himself to be copied”. “In the end, it has reached a classic licensing agreement with the typical Italian company, which will try to do a clean slate with two collections and try a qualitative distribution”, adds an expert in distribution.


Will Custo Barcelona return to shine as it did in the past? Various sources claim that it will need a stroke of luck. “The moment you lose the license, you lose control of the product, although they have creative management on their own”, says one executive. “As here the licensee is in a position of strength, they can not force him to invest in marketing - he adds -; Can it resurface? You can never say no, but here who has the margin is the licensee, so it probably does not pay to invest in marketing”






A decade of ins and outs

With an agreement that ends several years of agony, Custo Barcelona shelves rumors and speculation about its financial situation for more than twelve years, the last of them in the most complete silence, without even presenting accounts in the Commercial Register. In this long decade, some of the leading fashion investors have analyzed the brand, but, once again, have encountered the same obstacle: the owners and their expectations.


At the beginning of 2007 the search for a partner by the Dalmau brothers became public. At that time, the owners of the company denied the information, but shortly after the company Socios Financieros, who led the process, was responsible for confirming it and said that “the owners have received many unsolicited approaches by foreign industrial and financial groups”.


The eventual sale of Custo Barcelona has never been a matter of volume, but rather of image. Thus, far from the investment funds that usually invest in fashion, among those interested in the brand have been luxury giants such as LVMH or fashion distribution companies, both profiles with the ability to scale a rather discreet business. The firm's sales notebook has gone through the tables of almost all Spanish fashion companies.


A decade ago, the turnover of the parent company of Custo Barcelona was around 45 million euros (beyond the information available in the Commercial Register, the company has always been opaque regarding its figures) and the brand was in a good moment of image. In 2008, the firm gave a stroke by publicly announcing a demand against Desigual for systematic imitation. This threat, which has remained in the collective imagination as something real, never became effective and, in fact, the Dalmau brothers were sued in 2010 by Warner Bros.





As of that moment, the signature began to fall. Experts from the sector point out that the drift of Custo Barcelona is the result of two elements, mainly: on the one hand, the rise of Desigual and its colorful style, and, on the other, incorrect management. And, of course, the economic crisis, which took its toll on all the Spanish fashion companies.


 Historically, Custo Barcelona had managed its business through the companies Blue Tower (dedicated to the management of manufacturing and distribution in the multi-brand channel) and Ministry of Sales (dedicated to retail management of products manufactured by the first company), although this second one was absorbed by the first one in 2011.


The company had a third society, Domus Viator, which included real estate assets. It is the one that, in the middle of the crisis, supported the firm. Between 2008 and 2010, Blue Tower received seven loans, five of them mortgage and two personal, for a total initial value of more than 14 million euros. These loans were mortgaged on five properties owned by the Domus Viator company.


At the end of 2010, Blue Tower accumulated a total debt of 40.37 million euros, compared to 38.16 million euros of the previous year. Blue Tower took 50% of the liabilities of the three main companies of the group, which amounted to 79.55 million euros. That year, the aggregate turnover of the three dominant companies amounted to 54.66 million euros in 2010, compared to 56.68 million euros in 2009. The result of the exercise, however, rose to 2.19 million euros, in comparison with the 1.94 million euros in 2009.





In 2012, with the group's main company already in losses (Blue Tower ended 2011 with a negative operating result of 2.2 million euros), Custo Barcelona tried again. The Dalmau brothers hired the services of the consulting firm Eduardo Serra y Asociados, owned by former Defense Minister Eduardo Serra, to advise the company in the negotiations they had under way, according to themselves, with three funds. Again, the process paralyzed without further news.


In June of 2013, the rumors returned to the firm. Mergermarket then published that the company had maintained contacts with more than fifty potential investors, to which should be added international groups specialized in retail management. With the end of the deadline for submission of bids scheduled for the end of June, the process closed again in white.


Since then there have been few news about Custo Barcelona, ​​which has continued to parade in New York, while it has restructured its own stores network and has carried out several collaborations to maintain the brand. The most controversial of them was the one sealed in 2014 with the group of low-cost supermarkets Lidl, which the experts described as detrimental to the reputation of the fashion firm.


The alliance with Lidl did not serve to encourage sales of the company either, since they fell by 9.33% in 2014, although the fall would have been 25% without the collaboration with the low cost supermarkets. Blue Tower ended 2014 with a turnover of 17.71 million euros, compared to 19.54 million euros of the previous year, while, in 2015, managed to refinance its debt, which then amounted to 15.3 million of euros.


In 2018, the company was sanctioned by the Mercantile Registry, which reported the closing of the registration form of the company Blue Tower for the breach of the obligation to deposit their accounts since 2014. Shortly afterwards, the company presented the 2016 accounts: far from the company of more than 50 million of the past, Blue Tower registered a turnover of 6.6 million euros, with losses of 3.1 million euros.

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