By  on June 28, 2007

MILAN — IT Holding SpA executives on Wednesday raised the company's financial targets in a new business plan and touted the future viability of the Ferré brand despite the founding designer's death 10 days ago.

IT Holding will see its sales drop nearly 8 percent this year to 640 million euros ($864 million at current exchange) due to the loss of its lucrative contract for Dolce & Gabbana's diffusion line D&G. But company executives stressed revenue growth will resume in the coming years as they focus on accessories, open more stores and penetrate emerging markets like Eastern Europe and the Middle East.

Meanwhile, the death of Gianfranco Ferré isn't deterring IT Holding's growth plans for the fashion house, which executives forecast will nearly double in size to become a 206 million euro ($278.1 million) business by 2010. IT Holding chairman and chief executive officer Tonino Perna said management won't decide on a new creative director before this fall. But he did specify that he would prefer to find an internal candidate to fill Ferré's shoes rather than poach from elsewhere.

"We hope to find internally the natural heirs to carry on this marvelous patrimony," Perna said, likening Ferré to other fashion brands that have seen the death of their founding designer, such as Christian Dior or Chanel.

Perna and Ferré ceo Massimo Macchi declined to name members of the in-house design team, citing company policy, but Liborio Capizzi, who heads up the women's wear team, and Giovanni Vidotto, who spearheads men's wear, are key players.

IT Holding plans to grow its consolidated sales an average of 14.4 percent a year through 2010, ultimately reaching 840 million euros ($1.1 billion). The company expects its profit margin before interest and taxes to swell from 7 percent this year to 16 percent in 2010. The plan, more aggressive than IT Holding's previous one, also calls for investments of 80 million euros ($108 million).

At Ferré, management is betting that new updated boutiques, a wider array of accessories and diffusion line GF Ferré will freshen up the brand's image. Ferré recently inaugurated a flagship in Hong Kong and openings are planned for Rome and Tokyo. For fall-winter, Ferré is pushing its new collection of metallic-hued Mosaique handbags featuring perforated leather. Macchi noted with some regret that the Ferré store on Milan's Via Sant'Andrea saw its sales spike 87 percent in the 10 days following the designer's death.Macchi and Perna said IT Holding will stay true to its origins as a manufacturing and distribution partner for fashion houses' diffusion lines, which make up more than half the company's turnover. The company is on the hunt for new licensing opportunities, but will be judicious about adding new brands to its current portfolio, which consists of Just Cavalli, Versace Jeans Couture and C'N'C Costume National, they said.

Macchi contended Dolce & Gabbana's decision to bring its D&G line in-house actually freed up funds and management resources at IT Holding. Those were then pumped into other activities, mainly Ferré and cashmere brand Malo, he said.

The executives said none of IT Holding's current licensing pacts expires before 2010, guaranteeing a stable revenue source for the coming years. Macchi noted the recently launched Galliano diffusion line generated 15 million euros ($20.3 million) worth of orders in its first season for spring 2007.

Improved profit margins and cash flow at IT Holding will allow the company to chip away at its debt in the coming years. The company plans to shave its net debt by 125 million euros ($168.8 million) by 2010. At the end of March, the company's debts totaled 322.6 million euros ($435.5 million).

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