Pronovias is the success story of a family business, followed by a big sale that has led to a less buoyant phase. The bridal fashion giant has its origins in the lace and embroidery store El Suizo, founded in 1922 in Barcelona by Alberto Palatchi Bienveniste — it later became the St. Patrick workshop and, later, in 1964 and already with Alberto Palatchi son, at Pronovias—. Starting in the 1980s, great international growth began that turned the brand into a benchmark in the sector, and all of this had a juicy fruit many years later: in 2017, Palatchi sold Pronovias to the venture capital fund BC Partners for 550 million of euros.But this success story has had a painful epilogue from which the company is still recovering. Plagued by management problems and cultural changes around weddings, Pronovias suffered the blow of the pandemic much more than the rest of the sector. And, heavily in debt, the property achieved a significant write-off from two creditor funds in exchange for 100% of the shares. Since then, the company has tried to rebuild itself, with a new CEO, a staff adjustment, a new structure and more order in its offer. The Palatchi, a Sephardic Jewish family of Turkish origin, who arrived in Barcelona after World War I , had always been at the helm of the company, although in recent years not from executive positions – between 2006 and 2013 it had a general director from outside the family, and since then the position of CEO was also professionalized. The sale to an investment fund, BC Partners, although Palatchi later repurchased 10%, therefore represented a big change. The family was no longer involved in the day-to-day running of a company whose turnover then exceeded 100 million euros and earned more than 50 million. It might seem that the business would take care of itself and bear fruit: a year after buying Pronovias, BC Partners was already He pocketed 141 million in dividends. But the pandemic arrived and the weddings were cancelled. “The years 2020 and 2021 are in which weddings fall by half, and that means that the company did not reach us in the best way,” now explain Isabel Notario, director of Transformation and Controlling at Pronovias, and María Muntaner, director of Marketing. They are part of the Bain Capital team, the creditor fund that led a consortium, together with MV Credit, to agree to reduce Pronovias' debt in December 2022, from 385 million euros to 125 million. In exchange, they stayed with the company.
Less demand
The pandemic partly explains how this situation came about — at the end of 2022, when the operation with the funds was closed, BC Partners' Pronovias had concluded the year with losses of 190 million and a turnover of 68 million, according to the latest accounts available in the Registry—but the crisis cannot be attributed only to the pandemic. “There were several factors. First, the company structure was decentralized into four different geographic centers, with the investment in infrastructure and human capital that is needed for this. And second, the covid sank demand, which made the structure more oversized,” explains Notario. The first thing Bain Capital did was inject a lifeline (up to 180 million in 2023), centralize everything in Barcelona and put order to the brands: the group has seven, which competed with each other. “We have segmented between styles and prices, for example Early Bird is the entry-level brand, and Atelier is the most exclusive,” says Muntaner. The directives explain that they have also focused on the product, with more innovation in design and more collaborations with influencers, and with the development of a party line. “We had to return the aspirational character to the Pronovias brand,” explains the Marketing Director. Since the pandemic, they have noticed that brides spend more time searching and prefer more personalized dresses, for which many small brands have emerged that compete with Pronovias: one of them, founded precisely by Alberto Palatchi Gallardo, the grandson of the patriarch . All of this has led the dean of the sector to offer more customization and even the option for the bride to draw her own dress. In the most operational part, the new owners explain that they reorganized their suppliers, reduced delivery times and improved the stock management. Pronovias, with 4,000 points of sale (54 are its own stores and the rest are franchises) has its focus on the United States and Canada, its third largest market. The landing in Asia is on hold: the company wants to remain in southern Europe and “reconquer” the center of the continent and the United Kingdom. The strategy, while waiting for the stores to become profitable again, is to go the route of wholesalers. “It's where we can grow faster,” says Notario. This requires a distribution expert, and they found him in Marc Calabia, the CEO who joined Pronovias in May last year, replacing Amandine Ohayon. The group now has a new strategic plan until 2027, presented last month April, to find the path to profitability. It will not be easy, since last year's results (not yet recorded in the Commercial Registry) again show losses of 98.1 million euros and a reduction in income of 8.9%, with a net debt of 131 million euros. euros. The forecasts for this year are not optimistic: “The market is cold, we expect to close below the previous year in billing. But we are fulfilling the commitment to reduce the debt to the 50% that we had in 2022, and this is a positive sign of profitability and transformation,” explains the Notary. Along the way, he carried out an employment regulation file that 64 took part. people, 40 of them volunteers. “Covid did damage, but poor management did twice as much,” says Yolanda Navarro, general secretary of the CC OO Union Section at Pronovias. He considers that there is no room for more cuts, and he even allows himself to be optimistic: «It is costing us, but if we adjust to the market and there is a good industrial plan, we will achieve it.»