MILAN — Does the multibrand strategy still work?After the Nineties’ spending spree, flurry of acquisitions and exponential growth of such groups as Gucci and Prada, this has become a thorny question, given the uncertain economy and drop in consumer spending. A list of top chief executives — seldom seen together sitting at the same table — addressed the issue during a global conference held here Friday. Of course, all those present firmly supported their choices and validated their strategies."Our acquisitions were influenced by specific market conditions at the end of the Nineties and the lack of generation continuity within the families that owned the companies we bought," said Prada chief Patrizio Bertelli at the session, sponsored by The Wall Street Journal Europe. In a few years, he transformed Miuccia Prada’s family-founded leather goods company into a luxury goods umbrella group including Jil Sander, Helmut Lang, Church’s, Azzedine Alaïa, Genny and Car Shoe. Lastyear, Bertelli sold his 25.5 percent stake in Fendi to Moët Hennessy Louis Vuitton."These were strong labels that did not have fresh injections of cash and did not have such a wide visibility on international markets," Bertelli said, explaining his reasons for picking those brands. Hedefended his strategy, although it’s no secret the company has $800 million in debt, largely a result ofthe acquisition binge.In addition, Bertelli suffered a falling-out with designer Jil Sander who left the company she founded just five months after selling to Prada, which has led to controversial fashion reviews and endless speculations about the future of the label. "The multibrand strategy is a medium-to-long-term project and it relies heavily on market conditions," said Bertelli, who also noted that terminating licenses and restructuring a retail network always slows down a turnaround. "Depending on the market, I am convinced we will reach our goal of aligning all of our brands with Prada and that we will see positive results in two years." "First, we were seen as gods on earth, then we were put on the cross, and hopefully we’ll rise again," said ToninoPerna, chairman and chief executive of IT Holding, in a colorful analogy. Perna referred to the fluctuations of the market and how the multibrand strategy has been perceived by the industry in the past few years.Although Perna said he has felt the pressure of performance as much as his colleagues, he stood by his strategy: "It is important, however, to choose labels that do not overlap or compete within the same market niche."In the past few years, IT Holding has become a luxury group comprisingGianfranco Ferré, Romeo Gigli, Malo, Gentry Portofino, Exté and manufacturing company Ittierre. Domenico De Sole, appearing on a televised conference call from Boston, said the growth of Gucci Group was connected to the listing of the company. "[Through the stock market,] we have a stronger commitment to grow," De Sole said. He said Gucci was always very "disciplined" in its acquisition campaigns, although it had a lot of liquidity. "We chose companies close to our core competence, important targets that were declining, such as Yves Saint Laurent, very young talents such as Stella McCartney, Alexander McQueen and Nicolas Ghesquière for Balenciaga, or solid, complementary companies such as Sergio Rossi and Bottega Veneta."De Sole said he and creative director Tom Ford "looked for companies that have magic." Like Bertelli, De Sole said it takes time to see results — at least three to five years. "After the initial period of investments, if the brands are good, this is a positive strategy."Renzo Rosso, who founded Diesel as a jeans company and grew it to a group including Staff International, D Squared and Martin Margiela, said the multibrandstrategy works if the "heart [of the company] is left where it was born and the designer is let free: I would make a very serious mistake if I took Martin away from Paris — I can take logistics, the accounting, the finance and production away, but not the creative source."Santo Versace, chief executive of Versace, was the voice of a company that has grown through one brand. "Both strategies can work, but the important thing is to manage each brand as if it were the only one," said Versace, who later said spring-summer sales were "faring better than expected — we thought we would maintain [our position], instead, we are doing better."Bulgari ceo Francesco Trapani said the Italian jeweler chose to limit its exposure to new acquisitions by making them through the fund Opera, which Bulgari formed with a series of other investors. Opera owns Bruno Magli, watchmaker Sector and is negotiating to buy luxury linens group Frette from Fin.part. "We thought that making acquisitions [directly] would have taken away resources and management time."Diego Della Valle, chairman and chief executive officer of Tod’s, whose brands include Hogan and Fay, said he bases his judgments more on a company’s overall strategy than on whether groups choose to make acquisitions or concentrate on organic growth. "Multibrand companies are like apples in the supermarket: There are good ones and bad ones. It comes down to who has the good strategies and who has the bad strategies," Della Valle said.Meanwhile, luxury goods executives were cautious on market conditions and few were able to make concrete predictions about if and when things will improve.Bertelli said the market is volatile and highly dependent on geopolitical factors that are difficult to foresee.As reported, he postponed the company’s initial public offering this summer for the third time, owing to unfavorable market conditions, and said he hopes to do it some time next year, conditions permitting."We are working to be ready when the market recovers," Bertelli said."The market is in a stagnant phase," added Bertelli, who sees a slow, gradual rebound. "We won’t see a positive recovery as we saw in previous years, but there will be positive signs." Nonetheless, he noted that wholesale orders for Prada’s spring-summer collection are up more than 10 percent. He also noted that sales in smaller rich towns in Italy and Europe, like Bologna and Turin, helped compensate for weaker trading trends in tourist destination cities.Della Valle voiced a more optimistic tone. "The market is nervous but it is not terrible. I think that a recovery…could happen at the end of next summer."The session also touched on the issue of IPOs. Although the fashion and luxury goods industries make up a large part of the Italian economy, the sector is underrepresented on the Milan stock exchange. Many of Italy’s fashion companies are small family-run firms thathaven’t made the jump to the stock market."Companies that were planning IPOs as part of their strategy haven’t canceled their plans, but they have postponed them for a time that is more beneficial for them and their shareholders," said Massimo Capuano, ceo of the Milan stock exchange. Della Valle said there is often a culture clash between many small fashion houses and investment banks that have a "pure financial approach." But despite the stock market’s roller-coaster ride of late, Della Valle said he has no regrets."I would redo it immediately. The IPO was an excellent experience," he said.Giorgio Armani, who spoke through a taped message at the conference about the importance of a strong moral background in fashion, was equally tight-lipped on his plans for an initial public offering. "There are no immediate plans," he said, adding that the group is focusing on further developing its accessories line and improving its offerings in men’s wear.

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