Fendi Moves Beyond Turbulent Past, Into Spotlight in China

MILAN — When Fendi stages a fashion show on the Great Wall of China this fall, it will be a watershed moment for the country — a dry run of sorts before the entire world descends on Beijing for the Olympics in 2008.

But the show isn’t just a milestone for China; it also is one for Fendi. The company has had a turbulent past: feuding sisters, a multibillion-dollar bidding war and nearly losing its ready-to-wear designer, Karl Lagerfeld. But fashion’s bellwethers, be they balance sheets or runway reviews, indicate Fendi is firmly moving into a much more stable and profitable era.

This year, the fashion house, owned by LVMH Moët Hennessy Louis Vuitton, will roll out a long-awaited fragrance and open stores in new markets from Turkey to Qatar. Fendi is also mulling forays into fine jewelry and hotels and bolstering its Web site to provide better links to e-commerce partners like Neiman Marcus, Saks Fifth Avenue and Net-a-porter.

“It’s a very positive moment. Whatever is happening is happening with a lot of passion,” Fendi chief executive Michael Burke told WWD in an interview at the company’s bustling showroom. “That’s what really makes me feel so confident about Fendi becoming what [LVMH chairman Bernard Arnault] predicted it would become, because it’s not laborious. It’s happening in an organic way, a natural way.”

Fendi’s numbers indicate the financial health of the company is improving. Burke said sales last year came in at roughly 300 million euros ($378 million), would grow at a “substantial double-digit” rate for the current year and were on track to meet LVMH’s original goal of hitting 500 million euros ($664 million) by 2008. Burke said Fendi wanted to grow by an average of 20 percent to 25 percent each year for the next five years.

Fendi broke even on an operating level in 2005, six years after LVMH initially invested in the company, and the Italian fashion house is “more than halfway” to meeting its goal of a 20 percent operating margin, Burke said. Those results stand out because multibrand groups have had a mixed track record turning around acquisitions. Gucci Group’s Yves Saint Laurent is still in the red and Prada stumbled with Jil Sander and Helmut Lang before ultimately selling both brands.