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MILAN — With around $250 million in wholesale revenue expected this year, Moschino is a midsize player in an industry dominated by such billion-dollar giants as Gucci and LVMH Moët Hennessy Louis Vuitton.
This story first appeared in the April 9, 2003 issue of WWD. Subscribe Today.
But that’s just fine, as far as Moschino’s management is concerned. This house, with its history of satirical style in its collections and marketing, has long been a niche player — and it looks set to stay that way. Sales growth is a priority, but so is having fun.
“Fashion is a serious industry. Companies have to generate revenue but they shouldn’t take themselves too seriously. We are making things for women to wear,” said Massimo Ferretti, chairman of Aeffe, the fashion group that has produced Moschino collections since its inception in 1983 and bought control of the fashion house in 1999.
That statement sounds like one that could have been uttered by Franco Moschino himself. Indeed, the team leading the house — chief executive Marco Gobbetti and creative director Rossella Jardini — are undeniably guided by the deceased designer’s vision, but they don’t feel trapped by it. In fact, the company is in a growth phase on all fronts, from expansion in new markets like Asia to rolling out fresh products.
Three years after its founding, volume had reached $50 million. In 1993, the last full year Franco was with the company, wholesale sales of the signature, Cheap & Chic and jeans lines came to about $129 million. They grew to $240 million in 2002 and are seen rising to $250 million this year.
“It was an automatic process — it wasn’t easy, but it was automatic,” said Gobbetti, who has been at the company’s helm since 1993. “The way of doing things that Franco established gave a great deal of autonomy to every part of the company.…People were used to walking with their own feet.
“We don’t think of what Franco would do…we surely would have failed…the only way to go ahead was to think with our own heads, to do what we thought should be done,” he said.
Those efforts didn’t go unnoticed and even managed to attract its two longtime licensees as investors. In 1999, Aeffe, the manufacturer owned by designer Alberta Ferretti and her brother, Massimo Ferretti, bought Moschino for an undisclosed price. A few months later, Aeffe sold 30 percent of the business to SINV SpA, a holding company that owns Sportswear International, the licensee for Moschino Jeans.
“After having worked with them [since 1994] and gotten to know the management, we would have been stupid not to take advantage of the opportunity,” said Ambrogio Dalla Rovere, SINV’s chairman.
In terms of image, Armando Branchini, vice president of consultancy InterCorporate, said the house couldn’t stray too far from the image of its founder to remain commercially viable.
“To change the brand identity of Moschino from that of Franco would have been very risky…they could have lost all the [business] it had without gaining anything solid.”
Stefania Saviolo, co-director of Bocconi University’s master in fashion management program, said the company was lucky to have Jardini heading creative efforts. Having worked with Franco as far back as 1981, Jardini provided “style continuity.” But Saviolo said despite the fact that the house has been operating almost as long without Moschino as with him, it’s still premature to predict where the brand is ultimately headed.
“It’s a brand that was very, very linked to a person,” she said, noting that even though nearly a decade has passed, “It’s almost too soon [after Franco’s death] to tell.”
One area Moschino has earmarked for growth is Asia. Currently, this part of the world generates about 10 percent of Moschino’s total revenue but Gobbetti said that could climb to 25 percent within four years.
Previously, Moschino’s stores in Asia were run through franchisees. But when the contracts expired, the company in February formed a new joint venture with Hong Kong-based Bluebell Far East Ltd. to run the stores directly. Moschino holds 50.1 percent of the venture while Bluebell controls 49.9 percent.
“It’s an area in which Moschino has a lot of potential,” said Gobbetti. A large store is slated to open in Tokyo this month. And Moschino will cut the ribbon on a new Hong Kong boutique in July.
Moschino has 15 boutiques and 25 in-store shops combined in Japan, China, Korea, Thailand, Malaysia, Singapore, Hong Kong and Taiwan.
But the company isn’t neglecting its presence in other markets either.
“Moschino is changing a little. We have seen that direct retail is an important part of our business,” Gobbetti said.
Of its 24 single-brand stores in the world, only four of them are run by franchisees. In-store shops total 35, with most run directly. Italy and the rest of Europe are the biggest revenue generators, accounting for 25 percent and 30 percent of revenue, respectively.
Last month, Moschino opened its first freestanding store in France and opened its first store in Berlin on Friedrichstrasse.
The French market is particularly ripe for growth, he said. The 2,000-square-foot Paris store, located on the Left Bank’s tony Rue de Grenelle, features a glass-slipper chandelier, baroque chests of drawers and columns wrapped in layers of bright red felt. First-year sales are expected to come in at about $3 million.
North America, which generates about 20 percent of sales, is another market pegged for expansion. After a four-year absence, Moschino’s Cheap & Chic line returned to Bergdorf Goodman with the spring 2002 season. There are plans to renovate the two existing in-store shops there: one for the main line and the other for Cheap & Chic. Ron Frasch, chairman and ceo at Bergdorf’s, said the store has greatly increased its orders for spring and the response has been “wonderful.”
Bloomingdale’s, Saks Fifth Avenue, Barneys New York and Neiman Marcus are other key U.S. retailers carrying the brand.
Joan Kaner, senior vice president and fashion director of Neiman Marcus, Moschino has been performing particularly well since Sept. 11.
“I think it’s that feel-good aspect of the clothes,” she said. “Everyone may be depressed about what is going on in the world and there’s uncertainty but you put on Moschino and you smile — you realize there’s still some laughter left.”
New products are also a key component to diversifying the revenue stream. Currently, clothing makes up 50 percent of Moschino’s sales, while accessories generate 40 percent and perfumes 10 percent.
Most of Moschino’s products are produced in-house. Aeffe manufactures the top line and Cheap & Chic collections and its Pollini leather goods unit makes accessories. SINV’s Sportswear International produces and distributes the jeans.
“Aeffe avoided doing anything cheap and over-extended with a bunch of licenses,” said Saviolo.
But there are a few licenses for products requiring a specific expertise. Beauty firm Euroitalia holds the license for fragrances and has plans to launch a new scent in the fall. Luxottica handles eyewear, while Unionseta produces lingerie and swimwear. Larioseta and Portolano handle the scarf and glove businesses, respectively.
Last July, Moschino signed a deal for timepieces with Sector. The collection, featuring quirky twists like logo-details and heart-shaped pendants, is being unveiled at Basel’s Watch & Jewelry show this week.
Moschino is also banking on synergies with Aeffe’s leather goods division, Pollini, to improve its accessories offering. Redwall originally produced th e line of funky bags but that license expired in fall 2000.
Pollini also took over shoe production once the license with Mafra ended for the fall 2002 collection.
“I don’t think the accessories are at quite the same level as the ready-to-wear,” said Frasch. “They haven’t really found their identity yet, but I’m confident they’ll get there.”