Pronovias, year one with BC Partners: profits and growth slowdown

Pronovias disappoints markets after its first fiscal year with a new owner. The Spanish bridalwear group, owned by BC Partners since the summer of 2017, falls behind expectations. Under a new management team and with a new strategy, Pronovias is estimated to reduce its margin reaching between 17% and 20% this year and will grow between 2% and 8%, according to the last report of Moody’s.

The credit rating agency gives the company a B3, which means that it has a high credit risk, and a stable outlook, as well as it underlines how it is “unlikely” that the mark will improve in the short term.

Pronovias ended 2017 with a revenue of 166 million euros, which could advance to 170 million or 180 million in 2018. The prediction contemplates a “successful” integration of Nicole, the Italian wedding fashion firm that the group acquired this year.

Pronovias will end 2018 with an EBITDA of 35 million euros, 22% less than last year

Gross margin will swing in-between 17% and 20%, compared to the 24.7% of 2017. The group’s debt, for its part, is engrossing, going from a leverage rate of 6.8 times EBITDA to about 7 or 7.5 times EBITDA. That was, in fact, one of the reasons why Moody’s lowered the rating of the group’s debt from B2 to B3.

The agency stands out several factors in favour and against Pronovias that justify its rating valuation. Among the positive factors, Moody’s claims a strong recognition of the brand and an elevated generation of takings and profitability, although it also states that it is decreasing.

However, the agency also warns about the “modest” scale of the company’s M&As, the execution risks entailed by the new strategic plan, the concentration of product in a niche market and the decreasing trend of long-term marriage rates.

The group has reordered its c-suite team with Amandine Ohayon as new CEO

Pronovias has therefore stumbled upon its first steps in this new stage. The company was acquired by BC Partners in 2017, which got 90% of the group. The M&A loaded upon Pronovias a debt of 275 million euros.

The goal was set on the group leading “the fragmented market of bridalwear all around the world”, with purchases as the leading strategy for growth. This year, Pronovias fulfilled its plan with the acquisition of Italia company Nicole.

In order to face this new strategy, the company hired Amandine Ohayon, former L’Oréal executive, as new CEO. The executive built a new team with trustworthy people such as Fréderic Pellegrin as new CFO; Eva Ziegler as marketing manager or Amanda McCormick to pilot North America, a key market for the group’s new stage.