The Italia Independent Group has announced its intention to conduct a capital increase before the end of 2016 and to launch a program intended to cut costs and to regain sales momentum, after a poor first quarter, possibly with the help of “strategic partners” who can accelerate its implementation.

The company says it plans to simplify its sales networks in Italy and abroad and reorganize its chain of single-brand stores. It will also reduce non-strategic expenses and investments.

The capital increase, whose details have not yet been determined, is intended to raise up to €15 million through the issue of new shares. Existing shareholders have a right of first refusal on only one-third of the new shares.

This goes also for the company's chairman, Lapo Elkann, who recently obtained majority control of the company through purchases on the stock exchange. He has committed himself to buy any of the new shares that would remain unsubscribed and to help finance the new business plan.

The capital increase follows a 52 percent drop in the share price since the beginning of this year. Italia Independent's stock price made a deep dive after a brokerage firm, Equita Sim, cut the target price down from €27 to €14 a few days ago. The share price touched bottom, going down below €12.

The downgrade coincided with the publication of the company's preliminary results for the first quarter, which showed a drop in revenues of 18.5 percent to €8.15 million for the period. It came after the resignation of one of its founders and joint managing directors, Giovanni Acconciagioco (see EWI Vol. 17 N° 7-8 of May 31). The company admits that there was no recovery during the months of April and May.