MILAN — Prada chief Patrizio Bertelli lashed out at the Italian fashion industry Tuesday, accusing it of being out of date with a fast-paced and increasingly competitive world dominated by Asian manufacturing prowess and chains such as Zara and Hennes & Mauritz. The executive also called for a massive shift in the fashion show calendar, moving the spring ready-to- wear shows to July.
During a 24-minute speech at a luxury goods conference organized by the Pambianco consultancy, Bertelli touched on a variety of subjects, criticizing Italians for working fewer hours than their foreign counterparts and rallying for government aid to small businesses. He also acknowledged fast-fashion chains' competitive muscle, consumers' declining sense of brand loyalty and banks' failure to weather companies' difficult times.
"The Italian system's answers to these problems are always the same. There's been no change. [Instead] there are these peripheral discussions about how many days of fashion shows there should be and whether Prada will show first or Prada will show first," Bertelli said.
Despite those powerful words, the executive's tone softened considerably when pushed to discuss the future of his own 1.33 billion euro, or $1.69 billion at current exchange, company. Cornered by journalists asking if he'll finally come through on a thrice-postponed public offering next year, Bertelli muttered cryptically: "We'll see when the best moment arrives."
Meanwhile, there are other corporate developments afoot at Prada. Bertelli said he will finalize a fresh financing deal with Banca Intesa by the end of the month. As reported, Banca Intesa plans to buy 5 percent of Prada as part of a 300 million euro, or $375 million, package.
Elsewhere, Prada is gearing up to buy the remainder of shoemaker Church's by the end of the year, according to a source close to the company. Private fund Equinox, which bought 55 percent of Church's from Prada in 2003, has an option to sell control of the company back to Prada. Church's just tapped former LVMH Moët Hennessy Louis Vuitton Italia executive Agostino Ropolo to head up retail development for the footwear brand.
At the conference, Bertelli said Italians have failed to unite and confront a rapidly changing global market. He was particularly critical of the fashion show calendar and proposed moving up the spring women's rtw shows to July, ahead of Italy's famed monthlong vacation break in August."I don't understand why we have to wait until the last week of September," he said. Bertelli noted there is a four-week gap between the men's and women's fall shows in January and February, so he doesn't understand why the women's spring shows can't be closer to the men's collections in June.
Bertelli said the new schedule would help producers, suppliers, fashion companies and retailers get a competitive edge.
"I have spoken to the various Neiman Marcuses and Bergdorf Goodmans and the Americans are thrilled. If this came to pass, they could get their buying down so much earlier," he said.
"The buyers are tired," Bertelli continued, adding that more and more Italian companies are being asked to bring their collections to New York to ease retailers' travel itineraries and speed up the order process. "All the department stores want spring-summer products in the first week of December, or even in the last week of November," Bertelli said.
Still, such drastic calendar alterations would be challenging, if not impossible, warned Mario Boselli, president of Italy's Camera Della Moda. Nonetheless, Boselli said the Camera is willing to stage a meeting with Bertelli and other designers to discuss the idea of showing in July.
"Changing an international calendar where there is a connection between New York, London, Milan and Paris is not that easy," he said.
The dates of the women's rtw shows have already been set through 2010.
Bertelli wasn't the only conference attendee to issue fighting words at the event. Boselli took a swipe at the British Fashion Council for giving Kate Moss its Model of the Year award, and at fashion houses that use her in ads.
"I find it shameful that the British Council gave her an award. I think this is a model with a very negative influence on young people and everyone," he said on the sidelines of the conference.
Overall, bankers and executives were upbeat on business prospects.
Gregorio De Felice, chief economist at Banca Intesa, said there is increasing evidence of a slowdown in the U.S. economy, but he argued that growth in other markets, namely Japan, Europe, China and Russia, would help compensate.Similarly, Bulgari ceo Francesco Trapani said the overall luxury goods market is strong.
"The only area that is perhaps less promising is Japan because it is a mature market and companies have a large, well-distributed presence there, so growing there is more difficult," he said, adding Bulgari will get a boost in the Asian market when it opens two Tokyo stores next year, in Ginza and Omotesando.
Versace ceo Giancarlo Di Risio reiterated the corporate restructuring at the company is finished, making 2007 a growth year. Still, he couldn't be pressed for precise forecasts.
"We're optimistic, but cautiously so," he said.
Throughout the conference, representatives from Banca Intesa, which cosponsored the event, and Borsa Italiana referenced the lack of fashion companies listed on the stock exchange. That situation will change dramatically if and when Prada and Salvatore Ferragamo carry out their intended IPOs.
Borsa Italiana presented data showing that public fashion and luxury goods companies averaged higher profits and sales growth than private ones in 2005. The study was based on the balance sheets of 16 companies, including Benetton, Bulgari, Tod's, Giorgio Armani, Diesel, Dolce & Gabbana, Prada, Ermenegildo Zegna and Max Mara.
The listed companies saw their net profit rise an average of 19 percent, 1.5 times that of the privately held firms. Public companies' sales advanced an average of 20 percent, which is 2.3 times the growth at their private counterparts.
Gaetano Miccichè, head of corporate banking at Banca Intesa, said a lack of financing is restricting smaller fashion companies' ability to compete with industry giants. Playing off the Italians' storied rivalry with the French, Miccichè said Italian companies need to start planning their futures more aggressively.
"We can be the ones going into France and buying companies," he said.
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