By  on April 28, 2008

MILAN — Italian fashion group Aeffe SpA last week denied it was looking to off-load its shoe and leather accessories brand Pollini, despite rumors of private equity interest.

"It's a total lie," Aeffe general manager and chief financial officer Marcello Tassinari told WWD. "We have no intention of selling Pollini."

According to industry sources, two private equity firms are circling Pollini and an approach could come in May. They say Aeffe's slumping share price and infighting at Pollini prompted the interest, and estimate the brand's value at around 50 million euros, or $80 million at current exchange.

Tassinari dismissed the speculation, saying, "Private equity funds look at everything."

The claims come two months after Aeffe said it was interested in acquiring a majority stake in a luxury men's wear label in a bid to drive growth, particularly in emerging markets. Aeffe also operates the Alberta Ferretti and Moschino brands and produces collections for Jean Paul Gaultier.

The company's ability to weather the slowdown in consumer spending has put its stock under pressure since listing on Milan's STAR segment for small firms in July. Last month, Aeffe shareholders approved a buyback of as much as 10 percent of the group's capital in a bid to stabilize the stock price, which is just shy of an all-time low, after fourth-quarter earnings fell 17.3 percent.

On Thursday, Aeffe's shares closed at 1.70 euros, or $2.71 at current exchange, or about two-fifths of their launch price. The Milan Bourse was closed Friday for a national holiday.

Aeffe acquired a controlling stake in Pollini in 2001 for an undisclosed fee; since then the brand has expanded geographically and beyond shoes and accessories.

In 2004, Pollini tapped Turkish designer Rifat Ozbek to produce its first ready-to-wear collection and earlier this year, the company branched out into umbrellas and neckwear via five-year licensing deals.

However, according to sources, Aeffe's strategy for Pollini has met some resistance internally. Ozbek is also believed to be on his way out, with Aeffe interviewing for possible replacements.

In 2007, Aeffe registered earnings of 15.3 million euros, or $21 million at average exchange, on sales of 293.2 million euros, or $401.9 million. Pollini contributed 18 percent of revenues — 52.3 million euros, or $71.7 million.

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