ROME — Never mind uncertain times, stagnant economies and global political turmoil: Giancarlo Di Risio, Fendi’s new chief executive officer, remains riveted on luxury.
This story first appeared in the June 24, 2002 issue of WWD. Subscribe Today.
“We have the advantage of clear ideas and focused strategies, which help in difficult times,” said Di Risio, who joined Fendi in February. “Luxury, distinction and style will differentiate our product, which will be true to its roots and tradition.”
Accordingly, Fendi is expanding its accessories and fur divisions, its core businesses ever since Adele and Edoardo Fendi created the company in 1925. These divisions account for 80 percent of sales. In particular, the company will launch a footwear collection for fall 2003, designed and produced in-house for the first time.
“We think we can do with shoes what we did with bags,” said Silvia Venturini Fendi, creative director and a granddaughter of the founders.
The ubiquitous Baguette bag, launched in 1997, quickly became a fashion must — a success the company is repeating now with the Ostrik bag, inspired by the shape of an oyster. “Now that production is direct, we are freer to research and venture into new territory, taking up new challenges — even go against the rules,” she said.
Di Risio, who helped build IT Holding as its ceo in the Eighties and Nineties, said all Fendi products are now produced in-house, conforming to a strategy of controlling quality that many houses have adopted. Over the past year, Fendi bought back all but a few of its 20 licenses. Those remaining are eyewear, licensed to De Rigo outside North America and to Marchon in North America; ties, with Isaseta; watches, with Taramax; home, with Club House, and perfumes, with YSL Beaute, the beauty and fragrance division of Gucci Group. The beauty license runs until October 2005.
As reported, last month, an arbitration panel in Rome ruled that YSL Beaute could retain the Fendi fragrance license. Fendi Adele Srl had taken the case against Fendi Profumi, a division of YSL Beaute, to an arbitration court last year in an effort to win back the license. Fendi fragrances have sales of approximately $14.3 million annually.
Di Risio said production is now completely independent and self-sufficient, having severed all ties with Prada. In November 1999, Prada ceo Patrizio Bertelli and LVMH Moet Hennessy Louis Vuitton chairman Bernard Arnault teamed up to buy 51 percent of Fendi for an estimated $545 million, more than 33 times the company’s bottom line. Bertelli sold his 25.5 percent to Arnault in November for about $260 million. “In the future, we will perhaps produce accessories for the LVMH stable of brands, but not now,” said Di Risio. As part of the LVMH group, Di Risio said he could not disclose financial results for last year or project them for 2002. According to sources, however, Fendi had a net loss last year of $18.9 million against sales of $250.5 million and a debt of $189.1 million. (Dollar figures were converted from the euro at current exchange rates.) Di Risio conceded that Fendi was in the red. He attributed the debt to the investments made over the past year and this year, including ending or buying back the licenses and franchised stores and opening new boutiques around the world. The total of directly owned stores has risen to 84 from five.
“Most of the investments have been done, we have set the foundations for the future and we expect to see constant growth in 2003,” said Di Risio.
While Bertelli in 1999 had entertained thoughts of listing Fendi on the stock market by this year, nothing came of it. Di Risio now states, “We don’t rule out a public listing, but it’s certainly not feasible in the short term — surely not before two or three years.”
As for its retail expansion, in September, the historic Via Borgognona store in Rome will reopen as a veritable atelier, where made-to-order furs and accessories will be available. “It will be the only [Fendi] store in the world that offers this kind of service,” said Di Risio.
The store covers 10,800 square feet. Fendi is known for its exclusive furs, such as a golden fox cape with a double pleat, retailing at $23,900, or a Russian sable cape with a dyed-leather lining for $69,300. Many of the artisans and seamstresses now working in Fendi’s fur laboratories in Rome will move to the Via Borgognona store. Di Risio said he felt strongly about identifying Rome and Fendi and about increasing its presence in the city.
While the Via Borgognona store will be a more exclusive sales point, which will also include a space for cultural events and exhibitions, Di Risio plans to open a megastore in Fendi’s Palazzo Boncompagni overlooking Rome’s prestigious Via Condotti. The palazzo, which will house Fendi’s design and management offices, is currently being renovated, and the store will open next spring.
Other store openings include a shop in Cannes that was inaugurated last month, and in November, a boutique will open in Florence.
The boutiques — though never exactly the same, so that they can adapt to the varied locations — all feature wenge wood displays, iron floors and windows directly on the street.
Although Di Risio is keen on enhancing Fendi’s fur and accessories divisions, he pointed out that the company’s ready-to-wear line is also pivotal to the brand’s expansion. In particular, Di Risio said the company is strengthening its men’s division. The men’s collection will be publicized with a new ad campaign for fall, shot by Mert Alas & Markus Piggot and featuring Laurence Chapmon. The women’s model will be Rie Rasmussen.
“There is continuity with the previous campaign,” said Di Risio. “Our woman is sexy and intriguing and the campaign is aggressive.”
Fendi also closed Fendissime, the younger line launched in 1987.
“I believe there are two ways of growing a luxury brand: Either you focus on one single label, or you branch out with two or three separate lines,” said Di Risio. “We opted for the first solution.”
Notwithstanding the major changes of the past year, two key figures have kept steady: Karl Lagerfeld as the women’s rtw designer and Silvia Venturini Fendi as the design coordinator.
“LVMH wants to maintain Fendi’s Italian roots and heritage and, as a group, it has no desire to homogenize the brands it owns,” said Di Risio.
Di Risio said that, naturally, given the new structure of the company, he is building a management team with a new vision. Ever since the sale of the company, the rumor mill churned out stories of conflicts between the new management and the family — the five Fendi sisters, Carla, Paola, Anna, Franca, Alda, and their offspring who held various positions within the company. Silvia Venturini is Anna Fendi’s daughter. Di Risio firmly denied any squabble.
“Carla Fendi is at work from early in the morning until late at night, whenever she is not traveling as an ambassador of the company. The other sisters are consulted from time to time and bring invaluable advice to Fendi,” said Di Risio. “We all work together with the same purpose and common goals.”
Carla Fendi, who, in addition to being president of the company handles communication, public relations and advertising and is image coordinator of all Fendi spaces, said: “Changes… are professionally stimulating [and the] new experience with such an important group as LVMH was particularly profitable. One should always wish for a more international and expanded vision.”
Although Di Risio could not disclose sales percentages derived from different markets, he did say that the Far East was “important,” with 40 boutiques there, and that Fendi expects to expand in the American market.
“We plan to invest heavily in the U.S., where we will open a second boutique in New York, based on the Palazzo Fendi model, by the end of next year,” said Di Risio. There are currently 10 boutiques in the U.S., including the one in Manhattan on Fifth Avenue. The company has no short-term expansion plans for wholesale, but might introduce in-store shops at a later date.”