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Italian Government to Boost Fashion

Italy's minister of economic development says government eyeing more support.

MILAN — The Italian minister of economic development Claudio Scajola has promised he will present the “first interventions to support” the fashion industry by mid-March.

This story first appeared in the March 2, 2009 issue of WWD.  Subscribe Today.

“The government is set on sustaining a pivotal sector for the Made in Italy [label] and for all the Italian economy,” said the minister, adding he means to “speed up as much as possible” these measures, as it is doing in other sectors.


“The sooner the better,” Mario Boselli, head of the Chamber of Fashion, told WWD between shows during Milan Fashion Week. “We cannot go on with our own means.”

In February, Boselli had addressed the issue of Italy’s government ignoring the fashion industry, while approving a stimulus package of about $2.54 billion to boost business in the auto and domestic appliances sectors. “I can understand helping the automotive industry but wouldn’t fashion deserve the same, if not more, consideration than the furniture industry?” Boselli said.

It’s estimated that the fashion industry employs 800,000 people and counts 30,000 distribution companies.

Textile and clothing industry association Sistema Moda Italia also asked for help in a Senate hearing.

Scajola’s commitment comes on the heels of IT Holding SpA filing for the Italian equivalent of Chapter 11 bankruptcy protection. The group, which owns the Gianfranco Ferré, Malo and Extè labels, followed its production and licensing unit Ittierre SpA into administration. The companies are thus effectively state-owned.

The Italian government is beginning to take an active role in the financial crisis affecting fashion. In December, trade unions and Bologna-based La Perla Group’s new owner, San Francisco-based private equity fund JH Partners LLC, reached an agreement under which government funds will pay about 70 percent of 250 workers’ salaries for a two-year period.

Eyewear firm Safilo said in January it planned to shutter all four of its manufacturing plants in Italy on a rotating basis over the next two months, following a rapid slowdown in demand for designer frames. The government-sponsored closures, which are temporary, will be staggered through March 28 and could affect up to 2,700 staffers. Similarly, eyewear rival Luxottica Group SpA closed six manufacturing plants for two days in January and two days in February following disappointing fourth-quarter sales, affecting 6,000 workers in Northern Italy.

According to the Chamber of Fashion, the year until September 2008 was destined to be remembered as “not brilliant” and “moderately stagnant,” but then turned into an “emergency year.”

In calendar 2008, the Italian fashion industry reported a 4 percent drop in revenues, reaching 66.4 billion euros, or $97.6 billion at average exchange rate, compared with the previous year. Exports grew 1.2 percent to 42.6 billion euros, or $62.6 billion, but the domestic market showed an “unexpectedly quick and intense” 4 percent drop.

For the first half of 2009, the association expects a 2 percent decline in the sale of raw goods, such as textiles and hides, despite a stronger U.S. dollar, but it forecasts a 5 percent drop in sales of clothing and accessories. The last six months of 2009 depend on Europe’s political choices, said the chamber. If, for example, the U.K.’s temporary reduction of value-added taxes were to be taken as a model, “consumer spending would pick up in time to improve year-end results and maintain the contraction below 5 percent.” If the current wait-and-see strategy were to continue, the second half “could be worse than the first six months, with sales dropping more than 5 percent. Given these uncertainties, our basic estimate for 2009 is that of a 5 percent drop in revenues to 63.1 billion euros [$79.5 billion],” said the chamber.

Sales of clothing, footwear and leather goods declined 2.8 percent in the third quarter and, in October, showed a 10 percent drop compared with the same period in 2007. Sales of textiles and hides dropped 10 percent in the third quarter and 13 percent in October.

Overall for the year, sales of clothing and leather goods grew 4 percent. Russia and Eastern European countries continued to be strong buyers of Italian goods. Apparel sales in Russia grew 18.3 percent in the first nine months of 2008; sales of leather goods jumped 41.2 percent and footwear grew 27.8 percent. That said, the chamber expects a slowdown in that area in the last quarter.

Apparel sales declined 6.7 percent in the U.S. and 10.8 percent in Japan in the January-to-September period. Leather goods dropped 13.8 percent in the U.S. and 4.6 percent in Japan, and footwear showed a 17.5 percent decline in the U.S. and a 16.7 drop in Japan. Other Asian and European countries helped balance the negative performances in the U.S. and Japan.