SOURCE: VALENTINO FASHION GROUP

November 09, 2007 10:25 ET

VALENTINO FASHION GROUP : THE BOARD OF DIRECTORS HAS APPROVED THE RESULTS OF THE FIRST 9 MONTHS OF 2007

MILAN, ITALY--(Marketwire - November 9, 2007) - THE BOARD OF DIRECTORS HAS APPROVED THE REPORT ON THE FIRST NINE MONTHS OF 2007

CONSOLIDATED SALES +9.2% (currency adjusted +12%)

GROUP NET INCOME +11.4%

FIRST NINE MONTHS OF 2007:

- Consolidated sales: EUR 1,720.5 million (+9.2% vs 2006: EUR 1,575.4 million)

- EBIT: EUR 261.0 million (+14.8% vs 2006: EUR 227.4 million)

- Group net income: EUR 102.4 million (+11.4% vs 2006: EUR 91.9 million)

THIRD QUARTER OF 2007:

- Consolidated sales: EUR 693.2 million (+6.7% vs 2006: EUR 649.6 million)

- EBIT: EUR 148.6 million (+11.0% vs 2006: EUR 133.9 million)

- Group net income: EUR 60.9 million (+6.8% vs 2006: EUR 57.0 million)

Milan, 9th November 2007 - Today the Board of Directors of Valentino Fashion Group S.p.A. approved the Report on the third quarter and the first nine months of 2007.

FIRST NINE MONTHS OF 2007

Sales

Consolidated sales were EUR 1,720.5 million in the first nine months of Sales 2007, increased by 9.2% (currency adjusted +12%) over the comparable period in 2006.

Growth in the period was the result of a positive trend of all the main brands.

+-------------------------+---------+---------+------+----------+
|(EUR millions)           |January/ |January/ |Change|Comparable|
+-------------------------+---------+---------+------+----------+
|                         |September|September|  in %|    change|
+-------------------------+---------+---------+------+----------+
|                         |     2007|     2006|      |  in % [1]|
+-------------------------+---------+---------+------+----------+
|Hugo Boss                |  1,327.7|  1,215.6| + 9.2|       +12|
+-------------------------+---------+---------+------+----------+
|Valentino                |    192.3|    178.7| + 7.6|       +11|
+-------------------------+---------+---------+------+----------+
|Marlboro Classics/other  |    250.3|    226.4|+ 10.6|       +11|
|brands                   |         |         |      |          |
+-------------------------+---------+---------+------+----------+
|Other and elisions       |   (49.8)|   (45.3)|      |          |
+-------------------------+---------+---------+------+----------+
|Total                    |  1,720.5|  1,574.4| + 9.2|       +12|
+-------------------------+---------+---------+------+----------+
Group's sales confirmed a growing trend (+6.7%) even in the third quarter of the year, which usually registers, as the first one, higher levels due to the wholesale dynamics.

On a geographical basis the Group's sales continued to show growth on all the main markets, particularly in Europe (+9.5%) and in the United States (currency adjusted +21%).

+------------------------+---------+---------+------+----------+
|     (EUR millions)     |January/ |January/ |Change|Comparable|
+------------------------+---------+---------+------+----------+
|                        |September|September|  in %|    change|
+------------------------+---------+---------+------+----------+
|                        |     2007|     2006|      |  in % [2]|
+------------------------+---------+---------+------+----------+
|Europe                  |  1,216.2|  1,111.1| + 9.5|     + 9.5|
+------------------------+---------+---------+------+----------+
|Americas                |    283.2|    255.6|+ 10.8|       +19|
+------------------------+---------+---------+------+----------+
|Asia and other countries|    174.0|    165.4| + 5.2|       +11|
+------------------------+---------+---------+------+----------+
|Net sales subtotal      |  1,673.4|  1.532.1| + 9.2|       +12|
+------------------------+---------+---------+------+----------+
|Royalties               |     47.1|     43.3| + 8.8|          |
+------------------------+---------+---------+------+----------+
|Total                   |  1,720.5|  1,575.4| + 9.2|       +12|
+------------------------+---------+---------+------+----------+
+------------------------+---------+---------+------+----------+
DOS sales, equal to 15% of total sales, rose by 21% thanks to both the increase in the number of shops (345 against 275 at 30 September 2006) and the improved performance on comparable floor space.

EBIT

Group EBIT increased by 14.8% to EUR 261.0 million (15.2% on sales), thanks to improvement recorded by all brands.

+-------------------------+-----------------+-----------------+------+
|(EUR millions)           |January/September|January/September|Change|
+-------------------------+-----------------+-----------------+------+
|                         |             2007|             2006|  in %|
+-------------------------+-----------------+-----------------+------+
|Hugo Boss                |            217.7|            188.3|+ 15.6|
+-------------------------+-----------------+-----------------+------+
|Valentino                |             26.9|             24.0|+ 12.1|
+-------------------------+-----------------+-----------------+------+
|Marlboro Classics/other  |             24.2|             20.1|+ 20.4|
|brands                   |                 |                 |      |
+-------------------------+-----------------+-----------------+------+
|Other and elisions       |            (7.8)|            (5.0)|      |
+-------------------------+-----------------+-----------------+------+
|Total                    |            261.0|            227.4|+ 14.8|
+-------------------------+-----------------+-----------------+------+
Pre-tax profit

Pre-tax profit was EUR 247.7 million as at 30 September 2007, up by 13.3% form EUR 218.7 million as at 30 September 2006.

Net income

Consolidated net income, including income attributable to minority shareholders, amounted to EUR 176.5 million, up by 13.0% (30 September 2006: EUR 156.2 million).

Group net income

Net income attributable to the Parent Company's shareholders was EUR 102.4 million, increased by 11.4% over the first nine months of 2006 (EUR 91.9 million).

Investments

Investments in the period amounted to EUR 59.6 million (30 September 2006: EUR 82.4 million). The most significant projects concerned the opening of 61 new points of sale and the updating of the Group IT platform.

Net financial debt

Group's net financial debt was equal to EUR 435.4 million as at 30 September 2007 (EUR 392.9 million as at 30 September 2006). The increase was mainly due to higher operational outflows.

Net equity

Group's net equity, including minority interests, was EUR 736.5 million as at 30 September 2007 (EUR 672.1 million as at 30 September 2006).

OUTLOOK FOR THE YEAR

The good results recorded during last quarter as well as the orders backlog for Spring/Summer 2008 collections and growth in direct retail allow to anticipate a full-year rise in sales by about 10%, with operating and pre-tax profit improving more than proportionally than sales.

******

Statement of the Corporate Financial Reporting Manager

The Corporate Financial Reporting Manager, Luca Vianello, states, pursuant to article 154-bis, paragraph 2, of the Consolidated Law on Finance, that the accounting information contained in this document corresponds to the documentary evidence, record books and accounting entries.

******

This press release is available on the Company's website:

www.valentinofashiongroup.com

For further information:

Investor Relations

Tel. 02/62491442

e-mail: investor.relations@valentino.com

[1] On the basis of constant exchange rates compared with 2006

[2] On the basis of constant exchange rates compared with 2006

+-------------------------+---------+-------+---------+-------+------+--------+
|Income statement         |         |       |         |       |      |        |
+-------------------------+---------+-------+---------+-------+------+--------+
|                         | January/|       | January/|       |Change|Ch. in %|
+-------------------------+---------+-------+---------+-------+------+--------+
|(thousands of euro)      |September|   2007|September|   2006|      |        |
+-------------------------+---------+-------+---------+-------+------+--------+
|Net sales                |  1.720,5|100,00%|  1.575,4|100,00%| 145,1|   9,20%|
+-------------------------+---------+-------+---------+-------+------+--------+
|Cost of goods sold       |   -865,9|-50,30%|   -816,1|-51,80%| -49,8|   6,10%|
+-------------------------+---------+-------+---------+-------+------+--------+
|Gross margin             |    854,6| 49,70%|    759,3| 48,20%|  95,3|  12,60%|
+-------------------------+---------+-------+---------+-------+------+--------+
|Product research and     |         |       |         |       |      |        |
|development              |         |       |         |       |      |        |
+-------------------------+---------+-------+---------+-------+------+--------+
|costs                    |      -44| -2,60%|    -40,4| -2,60%|  -3,6|   8,90%|
+-------------------------+---------+-------+---------+-------+------+--------+
|Advertising, marketing   |         |       |         |       |      |        |
|and promotion            |         |       |         |       |      |        |
+-------------------------+---------+-------+---------+-------+------+--------+
|costs                    |   -122,9| -7,20%|   -104,9| -6,70%|   -18|  17,20%|
+-------------------------+---------+-------+---------+-------+------+--------+
|Selling and distribution |   -303,5|-17,60%|   -273,1|-17,30%| -30,4|  11,10%|
|costs                    |         |       |         |       |      |        |
+-------------------------+---------+-------+---------+-------+------+--------+
|General and              |   -122,2| -7,10%|   -106,7| -6,80%| -15,5|  14,50%|
|administrative costs     |         |       |         |       |      |        |
+-------------------------+---------+-------+---------+-------+------+--------+

|Operating income         |      262| 15,20%|    234,2| 14,80%|  27,8|  11,90%|
+-------------------------+---------+-------+---------+-------+------+--------+
|Other (costs) and        |       -1|       |     -6,8| -0,40%|   5,8| -85,30%|
|revenues                 |         |       |         |       |      |        |
+-------------------------+---------+-------+---------+-------+------+--------+
|EBIT                     |      261| 15,20%|    227,4| 14,40%|  33,6|  14,80%|
+-------------------------+---------+-------+---------+-------+------+--------+
|Net financial income     |     -0,1|       |        -|       |  -0,1|        |
+-------------------------+---------+-------+---------+-------+------+--------+
|Net financial income /   |    -13,2| -0,80%|     -8,7| -0,50%|  -4,5|  51,70%|
|(charges)                |         |       |         |       |      |        |
+-------------------------+---------+-------+---------+-------+------+--------+
|Income before taxes      |    247,7| 14,40%|    218,7| 13,90%|    29|  13,30%|
+-------------------------+---------+-------+---------+-------+------+--------+
|Taxes                    |    -71,2| -4,10%|    -62,5| -4,00%|  -8,7|  13,90%|
+-------------------------+---------+-------+---------+-------+------+--------+
|Net income               |    176,5| 10,30%|    156,2|  9,90%|  20,3|  13,00%|
+-------------------------+---------+-------+---------+-------+------+--------+
|Minority interest        |    -74,1| -4,30%|    -64,3| -4,10%|  -9,8|  15,20%|
+-------------------------+---------+-------+---------+-------+------+--------+
|Group net income         |    102,4|  6,00%|     91,9|  5,80%|  10,5|  11,40%|
+-------------------------+---------+-------+---------+-------+------+--------+
+-------------------------+----------+----------+------+----------+
|Balance sheet            |          |          |      |          |
+-------------------------+----------+----------+------+----------+
|(thousands of euro)      |30.09.2007|30.09.2006|Change|31.12.2006|
+-------------------------+----------+----------+------+----------+
|Net trade receivables    |     452,3|       426|  26,3|     264,1|
+-------------------------+----------+----------+------+----------+
|Other receivables        |      88,1|      61,3|  26,8|      84,9|
+-------------------------+----------+----------+------+----------+
|Inventories              |       395|     326,3|  68,7|       391|
+-------------------------+----------+----------+------+----------+
|Short-term non-financial |    -391,2|    -389,9|  -1,3|    -372,5|
|liabilities              |          |          |      |          |
+-------------------------+----------+----------+------+----------+
|Net working capital      |     544,2|     423,7| 120,5|     367,5|
+-------------------------+----------+----------+------+----------+
|Assets due beyond 12     |     126,6|     112,6|    14|     120,3|
|months                   |          |          |      |          |
+-------------------------+----------+----------+------+----------+
|Equity investments       |       2,9|       0,4|   2,5|       0,4|
+-------------------------+----------+----------+------+----------+
|Net tangible fixed assets|     261,2|     271,6| -10,4|     285,9|
+-------------------------+----------+----------+------+----------+
|Intangible fixed assets  |     102,7|        95|   7,7|        96|
+-------------------------+----------+----------+------+----------+
|Goodwill and trademarks  |     304,7|     303,7|     1|     304,2|
+-------------------------+----------+----------+------+----------+
|Medium/long-term assets  |     798,1|     783,3|  14,8|     806,8|
+-------------------------+----------+----------+------+----------+
|Medium/long-term         |    -118,2|     -95,2|   -23|    -114,8|
|non-financial liabilities|          |          |      |          |
+-------------------------+----------+----------+------+----------+
|Deferred tax provision   |     -52,2|     -46,8|  -5,4|     -51,2|
+-------------------------+----------+----------+------+----------+
|Net invested capital     |   1.171,9|   1.065,0| 106,9|   1.008,3|
+-------------------------+----------+----------+------+----------+
|Short-term financial     |     298,1|     206,6|  91,5|     174,2|
|liabilities              |          |          |      |          |
+-------------------------+----------+----------+------+----------+
|Cash & cash equivalents  |          |          |      |          |
|and short-term financial |          |          |      |          |
+-------------------------+----------+----------+------+----------+
|assets                   |     -69,3|     -72,5|   3,2|     -66,6|
+-------------------------+----------+----------+------+----------+
|Medium/long-term         |     206,6|     259,3| -52,7|     233,3|
|financial liabilities    |          |          |      |          |
+-------------------------+----------+----------+------+----------+
|Medium/long-term         |         -|      -0,5|   0,5|         -|
|financial assets         |          |          |      |          |
+-------------------------+----------+----------+------+----------+
|Net financial debt       |     435,4|     392,9|  42,5|     340,9|
+-------------------------+----------+----------+------+----------+
|Minority interest        |     271,7|     251,2|  20,5|     246,2|
+-------------------------+----------+----------+------+----------+
|Group net equity         |     464,8|     420,9|  43,9|     421,2|
+-------------------------+----------+----------+------+----------+
|Financing of net invested|   1.171,9|   1.065,0| 106,9|   1.008,3|
|capital                  |          |          |      |          |
+-------------------------+----------+----------+------+----------+
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