By  on September 26, 2011

MILAN — Steered by new chief executive officer Armin Mueller, Bruno Magli is revising its business model, outsourcing its production and logistics in an effort to return to profit in 2013.

As a result, the footwear firm said it plans to close its manufacturing plant in Bologna, Italy, where the company was founded in 1936. Mueller declined to say how many workers would be affected, but sources say about 100 people are at risk. The negotiations should be completed by the end of the year.

“We are very confident that we are able to develop our plan and see Bruno Magli succeed again, but this is unfortunately associated with people losing their job,” Mueller said. The executive, who was previously chief financial officer of Jil Sander, said he had spoken to unions and “demonstrated that Magli’s business model is not clever, not successful and no longer sustainable.” He added that the company has not been profitable “for years.”

British investment fund Fortelus Capital took control of the company in 2007 and has been investing to compensate losses, eroding equity. “There was no clear strategy or clear focus, and product was dominating the business, but there was no marketing intelligence,” said Mueller. “It’s fundamental to start with strategy, continue with organization, then to structure a business model to support that strategy.”

Mueller said the company will continue to produce in Italy through an existing network of suppliers and that he is final talks with a new designer to be revealed “relatively soon.” The firm is also going to expand its handbags and small leather goods division, which currently accounts for 10 percent of sales, and two weeks ago hired a handbag designer.

“There is huge potential with this category,” said the executive, who is also moving the company headquarters to Milan. “A new showroom in Milan is one key element in our plan, to be where the center of fashion is and not disconnected from the market, to accelerate and move key functions all under one roof, from product development to the design team.”

The brand, which Mueller described as “affordable luxury,” wholesales at 200 doors globally and he plans to reach 500 doors in four to six years. There are 36 Bruno Magli stores, of which six are in Italy, and 25 shops-in-shop in Japan. The latter country accounts for 30 percent of total sales. The U.S. accounts for another 30 percent of revenues, while the rest of the world represents 40 percent. Mueller said he has plans to expand in the U.S. with shops-in-shop, and to open stores in London, Paris and New York.

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