RICCIONE, Italy — As Sixty Group unveils a boutique hotel in this touristy beach town, co-founders Wichy Hassan and Renato Rossi are pondering the future of their company and whether or not to take it public.
"There's a lot of interest in the markets pushing a company like ours to go public," Rossi said in an interview from one of the hotel's rooms overlooking a busy shopping strip. "[An initial public offering] is probably something that we'll end up doing, but not…tomorrow morning."
Rossi, managing director at Sixty, said it will be at least two years before a possible IPO. Slightly resistant to the financial obligations involved with running a public company, he and president and creative director Hassan aren't ready to commit to the stock market just yet.
"We don't want to transform our work into a question of [quarterly growth] and work for the stock market. This is our fear," Rossi said of Sixty, which owns the Miss Sixty brand and more than a dozen other labels, such as Killah and men's wear brand Energie.
Regardless, Rossi and Hassan are working to bolster their company in terms of both image and sales. In July, the Sixty hotel in Riccione will officially open and serve as a barometer for a potential chain. The company also is investing 20 million euros, or $25.2 million at current exchange, to roll out 30 stores this year as it mulls possible acquisitions. Last week, the pair took home an image award from trade organization Pitti Immagine in Florence.
The two soft-spoken men, who bear a striking resemblance to each other both physically and in their laid-back demeanor, have worked together for about 17 years, first launching Energie and later breaking into women's wear with the Miss Sixty line in 1991. Now the two are entering an entirely new business, that of hospitality.
Hassan, who led the hotel's design team, said he wanted to create a place where Miss Sixty and Energie target customers would want to stay. The tech-savvy also can chat using the computer and Webcam installed in each of the hotel's 40 rooms, which run from 120 euros, or $151, to 180 euros, or $226, a night."It seems to me that hotels today are rather boring. At the end of the day, people go to a hotel just to sleep, have breakfast in the morning and take a shower, " Hassan said, speaking from an airy rooftop space filled with lime green and hot pink woven furniture and white wire chairs. A terrace overlooks the sandy beach and shopping district, home to Emporio Armani and D&G stores as well as a score of independent shops.
"I tried to make a hotel that would attract guests to come here and hang out," Hassan said. Sixty Group invested 15 million euros, or $18.9 million, and spent about a year and a half completely renovating a local hotel into an eye-catching structure with egg-shaped windows, light paneled walls and Mod furnishings. The ground level, which will feature a cocktail bar to lure passersby, already houses a Miss Sixty and Energie boutique selling limited-edition handbags, crystal-studded pendants and the first-ever model of Energie sunglasses.
In an effort to inject a dash of irony and individuality, Hassan hired 30 young artists to personalize each room. One room bears gold stars above the bed, another features spray-painted graffiti. Hassan himself designed one of the suites, using fluorescent paint to stencil images of a cartoon wolf on one wall. Intrigued with interior design, Hassan doesn't rule out the possibility of launching a Sixty home furnishings collection one day.
"We decided to experiment with the concept of a hotel here because there's a certain target of the public [present]," Hassan said of Riccione, a town on Italy's Adriatic coast renowned for its thriving club scene. Italian hotel group Boscolo is handling day-to-day management of the hotel.
Rossi said Sixty Group could open as many as six hotels over the next three years if it finds the right local partners for each market and upgrades the luxury component to coincide with young adults' budgets in developing markets such as China and the Middle East. Hassan and Rossi said they haven't decided where they want to open the second Sixty hotel, but Barcelona, Dubai and Los Angeles are contenders.
Meanwhile, Rossi and Hassan are concentrating on growing their core denim and apparel businesses. Over the last year, they have attempted to boost the exclusivity and fashion content of their brand by lifting retail prices by about 10 percent and using higher-quality chiffons, wools and other materials. Most of all, Sixty wants to win over more U.S. consumers, Rossi said."We want to compete in America and be very strong in America," Rossi said. Sixty plans to open seven stores in the U.S. this year, bringing the total to 22.
Sixty Group has done plenty of shopping since the company was founded in 1989. It has snapped up a series of diverse brands, from nautical apparel maker Murphy & Nye to denim label Killah and Refrigiwear, an industrial clothing brand that got its start in New York's Meatpacking District.
Those acquisitions have helped propel growth at Sixty Group. Sales last year grew 7.7 percent to 603 million euros, or $753.8 million at average exchange rates for the period, with the Miss Sixty brand generating 37 percent of the total. The company expects sales to climb to 900 million euros, or $1.1 billion at current exchange, by 2008. Europe is the company's biggest market by far. The U.S. generates just 13 percent of sales while Asia accounts for five percent.
As for profits, Rossi said last year's earnings before interest, taxes, depreciation and amortization came in at about 12 percent of revenue, which works out to be 72.4 million euros, or $90.5 million.
If Sixty Group does, in fact, pursue a stock market listing, it will become one of the few Italian fashion companies to actually carry out an IPO. Renzo Rosso, owner of Diesel, one of Miss Sixty's biggest competitors, has ruled out a stock market listing for his $1.4 billion empire.
Alessandra Coppola, a luxury goods analyst with Standard & Poor's, said she thinks Sixty Group would make a good IPO candidate, but she suggests the company list as soon as possible to avoid a potential slowdown in the luxury goods market.
Economic signals, such as rising interest rates and inflation, indicate consumer spending might start to suffer and that would hurt companies' valuations accordingly, she said. Growth levels are high at the moment and might not be sustainable, she warned.
"If they [are interested in an IPO] they should do it really quickly," she said.
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