Damac Properties founder and chairman Hussain Sajwani has vowed to challenge Gucci with his new fashion business and revealed plans to go “berserk” with an acquisitions spree.
Mr Sajwani, 63, concluded a deal to buy Italian fashion house Roberto Cavalli via a court-approved restructuring process two weeks ago through his private investment vehicle, Dico Group, and told the Skybrige Alternatives (Salt) conference in Abu Dhabi on Wednesday that he still wants to achieve more in business, including taking on one of the world’s leading brands on its home turf.
“With God’s help, and all of my friends in the government and employees, I have been successful in the Middle East,” said Mr Sajwani.
“When this opportunity came for Roberto Cavalli, the fashion industry, something very different in a highly competitive market… for me, at this age, I wanted to take this challenge, I want to see if I can succeed in Milan competing with Gucci.
“Then I will have the confidence myself that I am successful. Today, yes, you may rate me as successful, I am never happy with my success. I can build another building, so what? I can do another Damac Hills, so what? If I can compete with Gucci, in their home town, then I will be a little bit more happy.”
Mr Sajwani is not the first Gulf investor to seek to turnaround the fortunes of an Italian fashion house. Bahraini alternative investment manager Investcorp bought a majority stake of the Gucci business in 1988. It then embarked on a turnaround of the fashion house, bought out the remaining shareholder and reaped about $2bn (Dh7.34bn) through the offering and final sale of the company in 1997.
He expressed excitement about competing with LVMH, the French luxury goods conglomerate owned by Bernard Arnault, the world’s third-richest man.
Discussing the potential for other acquisitions in luxury sector, he said: “We are at an early stage, I want to really go beserk and acquire another chain very quickly. If, with God’s help I become successful, definitely the objective is not to just buy one brand, because today the world is moving to scale and if you’re not big you don’t survive.”
He argued the internet was driving huge changes in consumer habits and offering access to global markets.
“Today, you don’t have to go and open 500 shops like Gucci to compete with Gucci. To build 500 shops, it might take you 10 years. But to have a good designer, good product and good marketing campaign, you can do it in two or three years.”
In a wide-ranging conversation, Mr Sajwani also reiterated his concern about oversupply in the Dubai property market.
Housing prices have been falling in Dubai for five years, and Mr Sajwani recently called for a complete halt to all new home construction for two years to avoid “disaster”.
Asked whether he stood by his comments, he said: “Definitely, yes. Nothing has changed. The glut of supply we have, or we are going to have, will have an impact on the market.
“If we stopped today, we are OK. I think there is a demand for at least 15,000 to 25,000 units a year. But if we oversupply more than that there is a problem. I think we have oversupply in ’19, so we need to slow down, and make it either zero or a very small number.
Asked about the cause of the oversupply, Mr Sajwani blamed “greediness” of some developers and business people who saw a buoyant market and wanted to quickly make more money.
“You reach a time in the curve where you need to slow down,” he said.
“In the normal competitive markets like the US, UK, or somewhere else, the demand/supply, and all the companies are private, it will balance each other. The UAE is a bit different because the majority of the development comes from large, government or public companies, and that has to be monitored by the government more carefully I think."
Last month, Damac Properties reported a 78 per cent slump in its third-quarter net profit as revenue declined and selling expenses climbed. A note by an analyst from investment bank EFG Hermes forecast an 83 per cent profit fall for Damac Properties for 2019 to Dh193m due to a 36 per cent fall in revenue to Dh3.93bn.
"We expect the company to report disappointing numbers in 2019-21, with a year-on-year slump in revenue in 2019 (due to lower sales) and, in turn, margin pressure," the note said.
Mr Sajwani insisted that Damac remained healthy, with Dh5bn of cash in the company and more than Dh1bn of debt recently being paid off early.
