REGGIO EMILIA, Italy — With more than $1 billion in annual sales, Max Mara doesn’t go out of its way to publicize its growth or even reveal its true strategy. But this secretive fashion company, one of Italy’s biggest, has plenty to...
REGGIO EMILIA, Italy — With more than $1 billion in annual sales, Max Mara doesn’t go out of its way to publicize its growth or even reveal its true strategy. But this secretive fashion company, one of Italy’s biggest, has plenty to talk about.
For starters, it is branching into accessories, launching a fragrance and bringing its edgier younger brand, Max & Co., to the American market.
Though it’s a major fashion contender today, Max Mara’s origins are humble, and trace the evolution of post-war Italy. Founder Achille Maramotti started the business back in the Fifties as Italy emerged from the ashes of World War II and entered an economic boom. He built his fortune on making affordable clothes for middle-class women who couldn’t afford high fashion from Paris.
Luigi Maramotti, Achille’s son, has since taken over as chairman of the group, which comprises a large stable of brands including its namesake Max Mara label, Max & Co., Sportmax, Marina Rinaldi, Marella and Pennyblack. But even though the company has grown into an industry leader, the philosophy has remained the same: a no-nonsense approach that focuses on a quality product — not flashy marketing or star designers.
"We were never a marketing-led company," Luigi Maramotti said during a rare interview in the firm’s headquarters on the outskirts of Reggio Emilia, roughly halfway between Milan and Bologna. "The aim wasn’t to find a market strategy and create a product to fit it."
That product-centric mantra is palpable at Max Mara’s San Maurizio factory, which makes just 120 to 130 jackets and overcoats a year. Here, high technology marries Old World technique. Workers use computerized cutting machines to doge defects in the fabric. But the end product winds up in a Sixties-era steam presser so it hangs just right.
"We make people who work here feel involved in the finished product," said factory head Giuseppe Bacci. The 25-year Max Mara veteran beams as programmable sewing machines execute top-stitching and produce pockets in a fraction of the time those tasks would require by hand.
"We don’t do this to leave people at home, but to free them up to learn other things," he said.Those sewing buttons might toil in anonymity, but so do those who head the design, even at the highest level. And therein lies another characteristic distinguishing Max Mara from its peers.
Over the years, the company’s designers have honed their craft in hiding, their identity coming to light only after the fact. But behind that "Wizard of Oz" curtain stands a crop that would elicit envy from even the most prestigious fashion schools. Max Mara alumni include the likes of Karl Lagerfeld, Narciso Rodriguez, Jean Charles Castelbajac, Domenico Dolce and Stefano Gabbana.
"We worked with famous designers, but we didn’t need their names," Maramotti said. "At the end of the day, our mission is to make the best product possible….It’s dangerous for a company that says it makes fashion to assign the most important task to just one person."
That strategy has its advantages, said Stefania Saviolo, co-director of the masters in fashion management program at Bocconi University in Milan.
"It’s not identifiable with a particular designer but it is recognized as a designer brand," she said. "Not having one designer means you are less dependent on creative types."
At the same time, Saviolo said the jury is still out on whether Max Mara’s style could limit itself to too old a customer.
"It’s a classic style for a mature woman," she said. "It’s not clear how long that will be salable."
Despite challenging market conditions, Max Mara did see sales growth in 2002, albeit at a slower pace. Revenue rose 1.1 percent to $1.21 billion, compared with a 10 percent jump a year earlier. The company didn’t release profit figures, but a copy of the company’s balance sheet obtained by WWD shows the group posted a net profit of $85.3 million in 2001 compared with $76.5 million the year before.
Dollar figures have been converted from the euro at current exchange.
One analyst said Max Mara’s financial performance is fairly strong for a company that does most of its business in clothing rather than higher-margin categories like accessories. But Max Mara is working to diversify its product offering.Maramotti said Max Mara is in the process of buying up leather companies to produce more handbags and shoes to complement its collections. There’s plenty of room for growth as the accessories business currently accounts for 7 percent of sales in the group’s directly owned boutiques.
Elsewhere, the company is planning to launch its first fragrance, possibly in 2004, through a joint-venture with Wella.
Maramotti said the success Max Mara has seen with eyewear convinced the company there was untapped potential for the brand to move into accessories and establish a stronger link to its customer base. Max Mara launched eyewear through a licensing deal with Safilo in 1997.
"It’s not just a question of the relationship with the customer…but it is how that relationship develops over the long run," he said.
Max Mara also aims to broaden its geographic reach, with plans to bring its young, trendy Max & Co. to the U.S. This summer, the company will christen three Max & Co. stores at California shopping centers in West Hollywood, Palo Alto and Costa Mesa. Another store in Las Vegas’ Mandalay Place mall is slated to open in October.
The company plans to open between 40 and 50 Max & Co. stores in the U.S. over the next five to six years and Max Mara hopes to wholesale the line to retailers like Neiman Marcus, Saks Fifth Avenue and Barneys New York.
The company also hopes to tap into a very different demographic with its Marina Rinaldi brand. Currently, that brand has five stores in the U.S. but Maramotti said he wants to eventually tally 20 boutiques in the American market.
Aiming to lure full-sized, fashionable women, the label recently launched a trendy subcollection called MR by Marina Rinaldi,spicing up its stores with items like sexy skirts, chic shearling overcoats and leather pants.
Bringing new brands to the U.S. will help Max Mara diversify its revenue source, which derives primarily from Europe. Currently, the U.S. accounts for 10 percent of the firm’s revenue. Japan and the rest of Asia, another market pegged for expansion, accounts for 18 percent.
Over the years, Max Mara has built a vast distribution network of about 1,790 stores in the world."Max Mara was the first company to understand the importance of vertical integration," said Bocconi’s Saviolo. "It invested in retail before the others."
That early retail push brought advantages, she said. Not only did Max Mara get a jump on the competition by assembling a large part of its distribution chain back when real estate was much cheaper, but it was easier for Max Mara to understand the market and what was selling.
"It’s a business model that is widely studied," she said.
Max Mara, like many other Italian fashion companies, is steeped in family tradition. Maramotti’s brother and sister are also heavily involved in the business. Ignazio Maramotti holds the managing director spot while Maria Ludovica Maramotti oversees product development. But Luigi Maramotti is keen to stress that the company is no mom-and-pop shop.
"When a company gets very big, it’s no longer a family concept but a managerial one," he said.
Could such a corporate culture induce Max Mara to go public? "Never say never," said Maramotti, but he was quick to add that an initial public offering isn’t in the cards for now. "It’s not a necessity that we have. Our policy isn’t to make acquisitions and we don’t have any debt."
If anything, staying private gives Max Mara more breathing room, he said. It frees the company to focus on long-term strategy rather than produce strong numbers every quarter.
"There’s a different atmosphere for management when it’s not under pressure to produce results every three months," he said.
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