Valentino’s revenues fell 3 percent at constant exchange rates to €1.35 billion ($1.44) last year, the Roman fashion house said Tuesday. Operating profit fell 18 percent to €99 million.

The drop was driven by a “challenging” European market in the second half of the year, as well as efforts to reduce its exposure to wholesalers.

Direct sales rose 3 percent in 2023, Valentino said, while its perfume and beauty line operated by L’Oréal flourished, with turnover jumping 42 percent.

Many smaller Italian houses have struggled to navigate a slowing luxury market last year even as French giants LVMH and Hermès surged ahead. At Valentino, the results help to explain owner Mayhoola’s decision to shake up the brand’s aesthetic, bringing on former Gucci designer Alessandro Michele to succeed longtime creative director Pierpaolo Piccioli.

While Piccioli continued to stage celebrated haute couture outings in recent seasons, the brand has struggled to generate broad excitement for its commercial offer. While Valentino has a devoted following for its high-end ready-to-wear, the wider business still depends heavily on a handful of commercial pieces like its studded bags and “Vlogo” belts.

In a note to editors, CEO Jacopo Venturini flagged progress on rolling out a new store concept that provides a more immersive experience of the brand and its collections, as well as growth in digital since bringing its e-commerce operations in-house.

Valentino plans to sit out the upcoming menswear and haute couture seasons ahead of Michele’s debut, which is set to take place during the women’s ready-to-wear season in Paris in September.

Valentino is betting Michele’s arrival will usher in a new era of bold design after two years of so-called “quiet luxury” aesthetics fuelling growth for the industry, chairman Rachid Mohamed Rachid explained in a Bloomberg TV interview Monday. Michele’s arrival will open a “new chapter” for the company, Rachid said.

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