Unprofitable clothing chain Pierre Cavallo to file for bankruptcy

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Clothing store chain Pierre Cavallo is set to file for bankruptcy and discontinue its business, unless someone can be found to take over the operations. The firm’s main creditor is Nordea Bank. In all, Pierre Cavallo employs around a hundred people.
      Previously the chain was primarily known for its knitwear, but recently more and more skirts and trousers have been added to the collection. Simultaneously, the target customer group has become slightly younger.
      This spring’s collection, focusing on black and white, includes plenty of linen and thick lace.
     
"The time was correct for filing for bankruptcy. The fashion industry lives in cycles. Making purchases for the next season will begin in June-August", says managing director Yrjö Gorski from the Association of Fashion Retailers in Finland.
      According to director Eva Korhonen, Pierre Cavallo filed for bankruptcy because the company ran out of money and the sales figures were too low.
      The business, owned by the Helsinki-based Rautiainen family, ran successfully up until the end of 2004. After that the operation has been unprofitable, with the last two financial periods producing negative results.
      The name Pierre Cavallo is a fictional one, reflecting the fact that the first three Muoti-shops ('Fashion Shops') owned by the Rautiainens, the first of which was set up 43 years ago, primarily concentrated on Italian fashion. As the business grew, a brand label had to be devised.
      Today, Pierre Cavallo has 20 outlets of its own, plus several franchises, some of which are located in Russia and in the Baltic States.
     
In Finland, Pierre Cavallo operated under constant pressure from large international fashion houses. Its articles are made in different locations around the globe, though primarily in the Far East.
      According to Gorski, in Finland even a small fashion house can compete with mass production chains, so long as its brand is strong enough to justify higher prices.
      Pierre Cavallo, however, sought to compete on price, quantity, and fashion, attempting to mimic the world's large clothing and fashion chains but without the benefits of scale offered to those companies' buyers.
      Up until now the outsourcing of production into low-cost countries has only affected the job situation in the Finnish clothing industry, but not in retailing.
      At the turn of the 1970s, the golden age of the branch, the Finnish clothing and shoe industries gave work to 70,000 people. Now there are fewer than a thousand workers left in clothing and shoe production. More dismissals have been announced this spring.
     
The last Tampere-based shoe manufacturer Hamken Oy entered into debt restructuring and protection from its creditors, when the Tampere District Court accepted the factory’s bankruptcy application at the beginning of May.
      A proposal for the restructuring has to be filed with the Court by September 20th. Hamken’s main creditors are Nordea Bank and Finnvera, a state-owned financial services provider specialising in promoting domestic operations of Finnish businesses.


Previously in HS International Edition:
  Tampere-based Palmroth shoe manufacturers file for debt restructuring (19.4.2007)

Links:
  Pierre Cavallo

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