By  on June 5, 2006

NEW YORK — With higher heels and advanced handbag styles, Salvatore Ferragamo is getting sexier.

The luxury brand continues to roll with core classics and exotics, as well as tried and true Audrey ballet-style flats and Anthony driving loafers. But trendier glamour bags and shoes are a bigger part of the collections lately.

“We have to be more out there,” said Massimo Ferragamo, chairman of Ferragamo USA Inc., who sees progress and wants more. Other handbag and shoe brands, such as the less-expensive Coach, as well as hip, smaller brands like Jimmy Choo and Manolo Blahnik, seem to still steal most of the limelight.

During an interview with Ferragamo and Vincent Ottomanelli, who stepped up from chief financial officer to become president of Ferragamo USA last month and also holds the title of regional director, the officials spelled out the agenda. The division has emerged from an introspective three-year period of internal change, enabling it to look outward for greater growth.

The executives stressed the company operates far more efficiently now, with a better sense of what to sell and where to sell it, how to spend money, and with a premium on recruiting talented executives.

“I let Vincent run the business. I don’t get in the middle,” Ferragamo said, explaining the new management structure. “He is responsible for the day-to-day operations. I am involved in key strategic decisions.” The two report to Ferruccio Ferragamo, chief executive officer of Salvatore Ferragamo Italia in Florence. Massimo was interim president until Ottomanelli got promoted.

There is a stepped up U.S. retail expansion in the works, with sites being scouted in many cities, as well as shop-in-shops, and an eye on double-digit sales increases. Ferragamo has 18 stores in the U.S. “The retail, the wholesale shop-in-shops, and renovations have been priority number one,” Ottomanelli said. “The luxury market is still very strong and we see opportunities where we can really take advantage in the future.”

He said the three-year business plan [2006 to 2008] is to achieve 15 to 20 percent sales increases, which will be garnered through new locations and comp-store gains, which are tracking at 10 percent this year, according to Ottomanelli. In addition to seeking retail growth, there’s a desire to further connect with the Hollywood set, which lately has been building with the likes of George Clooney, Will Smith, Matt Dillon, Kanye West, Jessica Alba, Eva Mendes and Eva Longoria wearing the brand.Ferragamo has a long history with Hollywood. Born in southern Italy, Salvatore Ferragamo emigrated to the U.S. in 1914, and for decades created custom shoes for the movies and big stars from different eras, from Rudolph Valentino to Audrey Hepburn. Executives are relishing the permanent place the House of Ferragamo will get in Beverly Hills on Oct. 8, when the Ferragamo family is presented with the Walk of Style plaque on Rodeo Drive. The award each year recognizes designers for contributions to fashion and entertainment.

It’s no coincidence that the company is renovating its Beverly Hills shop. The 6,000-square-foot store is among Ferragamo’s top units. The project should be complete in September.

“By 2007, all our stores [in the U.S.] will either be new or renovated,” Ottomanelli said.

The company has always been extremely selective in securing sites, seeking the most prominent boulevards and corner locations around the world, and presenting a consistent upscale decor. But with greater expansion — Ottomanelli anticipates three openings annually for the foreseeable future — comes greater risk, along with possible bigger rewards.

One of this year’s three new locations will be a 2,500-square-foot unit in Atlantic City at the Pier at Caesars in late June or early July. In a town associated with high rollers and not really luxury, Ferragamo believes the discretionary dollars will be there for luxury tenants on the Pier. “We did our homework. This is not a gamble,” Ferragamo said.

There is also a 3,500-square-foot unit in the Mall of Millenia in Orlando opening in September, and a 3,500-square-foot unit in NorthPark Center opening in Dallas in September. The 6,000-square-foot South Coast Plaza unit in Costa Mesa, Calif., is also being renovated.

As this happens, the company is seeking to broaden wholesale with additional shop-in-shops. Ferragamo considers its three top retail accounts to be Nordstrom, Neiman Marcus and Saks Fifth Avenue. The company’s business with Bloomingdale’s will get a lift when a shop-in-shop opens in a branch in San Francisco this fall.

While no other leases are signed, several are likely to be soon. “We’re looking at Boston, Bergen County, Philadelphia, Phoenix and Las Vegas,” said Ottomanelli. In Vegas, “there are a lot of interesting projects,” presenting opportunities, in addition to the Ferragamo store that already operates in The Forum Shops at Caesars.The executives also expressed the possibility of opening a second store in Manhattan and perhaps returning to SoHo where a store was closed, but those plans are far from immediate.

There is room for growth in Canada, too, where only one Ferragamo store operates in Vancouver.

“At the moment, I don’t see a cap,” on the North American store count, Ottomanelli said. Worldwide, Ferragamo operates more than 450 wholly owned stores.

The preferred size for most units is 3,000 to 3,500 square feet. Fifty percent of the revenues are in men’s and women’s shoes; 30 percent are in handbags, and 20 percent in ties, silks, small leather goods and ready-to-wear.

The biggest moves are being made in ladies shoes. “Ladies shoes are currently our focus,” Ferragamo said. “There will be definite improvement in the fall and even more in spring 2007. For sure, the competition has been a factor.”

Both the external climate and internal issues were what made Ferragamo take a close look at itself. As Ottomanelli said: “We looked at every cost center. We looked at how we spend our money. We looked at ways to spend more efficiently and more wisely, and we focused on the talent pool.” Real estate performance and return on investments were closely examined, leading to the shuttering of the SoHo store.

There was lots of change in management at the U.S. offices, situated next to the Ferragamo Fifth Avenue flagship on the corner of 52nd Street, which employs about 360 people. While there were departures and streamlining, the organization was also pumped up. Aside from elevating Ottomanelli, key recruits over the past few years include Paula Faulk, head of merchandising; Linda Russell, senior vice president for women’s; Thomas Costello, vice president of real estate, and Dana Gers, senior vice president of marketing.

Asked about the company’s performance now, Ottomanelli said, “We are operating much stronger today than we were three years ago.”

“There will be no surprises,” Ferragamo added, referring to the road ahead. “We will continue to have our major focus on luxury leather products, shoes, handbags and small leather goods.”

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