MOLVENA, Italy — Diesel’s growth engine doesn’t run on just one type of fuel.
While the company’s eponymous high-end jeans line remains the core of the business, the firm over the past few years has expanded its brand portfolio through spin-offs from the main line, such as 55DSL and Diesel StyleLab, and acquisitions, which have included controlling interests in the Martin Margiela design house and in DSquared. Diesel’s high-end operations also include the ready-to-wear producer, Staff International.
The expansion has started Diesel down the road to becoming something of a casual-luxury conglomerate
But the company’s owner, Renzo Rosso, denied the deals have been part of any concerted strategy.
"I never meant to buy companies—nothing was planned," Rosso said during an interview in his Molvena office.
Rosso said he bought Staff International in 2000 because it was filing for bankruptcy and that he could not allow "one of the best manufacturing companies in the world, with an incredible know-how, to simply disappear."
Diesel had just licensed the company to produce its StyleLab collections.
"I had to make a decision and quickly — the company was ours in a week," he said. Rosso said it took two years to streamline what he called an unnecessarily complicated structure.
"There were so many problems and nothing was logical or organized," said Rosso. He added the company is now finally in the black, after a complete revolution on the creative side, as well.
Rosso terminated licenses with Mila Schön, Salvatore Ferragamo, Atsuro Tayama, Ungaro and Bella Freud, and discontinued the owned brand, Gym. The only production contract Rosso has maintained is with Vivienne Westwood.
Last fall, Rosso took control of the Martin Margiela brand, a former Staff license, and more recently, he sold off the New York Industrie brand to the Italian firm, McAdams, saying that he wanted Staff to focus on the Margiela and DSquared businesses.
The Staff business was a key connection point between Margiela and Rosso, who does not hide a special penchant for the elusive designer and looks forward to the "enormous possibilities" of his brand."Margiela is an incredibly intelligent and talented man," said Rosso, who sees similarities in the essence of Margiela’s brand and the Diesel label. "Both are based on the vintage culture."
While Diesel is a $660 million international powerhouse, Rosso says he wants to develop Margiela’s small business without compromising its exclusivity.
"Rosso’s acquisition strategy is not based on a need to grow sales but on the incorporation of new, innovative ideas, and independent creative minds," said Carlo Pambianco, a Milan-based luxury goods analyst.
Rosso said Diesel has strengthened, expanded and developed the "heart" of Margiela’s business, the style office and atelier in Paris.
"We don’t want to lose the philosophy of the maison, so that will remain there," said Rosso, adding that Staff handles production, logistics and shipments.
Rosso said that, starting with the spring-summer 2004 collection, Diesel has licensed the Margiela’s knitwear division to McAdams, which also produces for Cividini. Margiela’s knits were previously produced by Miss Deanna, acquired last year by Giorgio Armani and account for around 35 percent of the designer’s collection. "This is the right proportion, we are not going to change it," said Rosso.
Rosso said he feels a personal connection to the Margiela brand, something he considers critical: "A brand must be connected to a father, to a heart that beats and must be an expression of the designer that creates it. I either feel a brand or I cannot work with it."
Inside Diesel, most of the design team has been working for the company for more than a decade, a rarity in this business.
"We have more than 50 creative minds at work here, and I like to be with young, trendy people who expand my boundaries with their music and language," said Rosso.
Rosso’s talent for managing designers is put to the test working with the Dan and Dean Caten, the twins behind the DSquared label, who are possibly the personality opposites of Margiela.
Where Margiela is introspective, intellectual and secretive, the Canadian Catens are flamboyant, party loving and exuberant."With Martin, it is enough to explain the reasons behind a strategic decision, and he’ll understand; with the twins I realized they would rather learn from their mistakes," said Rosso. Rosso, who handles marketing and communication for DSquared, said that he has a "fantastic relationship" with the Catens.
The men’s and recently debuted women’s collections have received strong responses. Rosso described them as being as explosive as an "atomic bomb."
For the first women’s collection, for fall-winter 2003, Rosso said he had expected sales of about $1.4 million, but actual results came in double that level. Total business has grown from about $1 million to $19 million since Diesel in 2001 signed its 10-year agreement to produce and distribute the line.
Rosso said he sees Margiela’s business as stable and having longevity. He called DSquared a "fresh, casual luxury" brand that he will watch as it progresses, "checking how much it is connected to at this moment."
Diesel also produces Karl Lagerfeld’s jeans for Lagerfeld Gallery. Rosso said he was "honored" to be working with the designer, who he called a "fashion icon."
"Karl Lagerfeld is a symbol of creativity, tradition and changes," Rosso said. "His choosing Diesel...is an important gift for me, and an acknowledgment of our unbeatable know-how in denim and the confirmation of our reputation as a casual ready-to-wear brand."
Rosso described the constellation of the Diesel brands as "fitting together and not disjointed: Diesel StyleLab is the creative tip, 55DSL is the extreme-sports line, Staff International targets a modern, trendy rtw, DSquared is the high-end casual line and Margiela the refined modern product."
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