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Luigi Botto Getting Back on Track

Luigi Botto Group is bouncing back from financial woes with a $12.4 million capital infusion, and a focus on technology and exclusivity.

MILAN — Textile giant Luigi Botto Group is not letting its recent financial woes become a stumbling block.

With the help of a pool of banks and a 10 million euro, or $12.5 million, increase in capital, the group is poised to recover lost ground over the next three years, pushing the envelope on technology and exclusivity.

“We want to offer a positive, optimistic message,” Pierpaolo Leone, president of the group, said at a press conference last week. “We are aiming at a high-end product that none of the low-cost manufacturing countries can offer.”

Weighed down by a $90 million investment in new machines, a weak dollar and increased competition from China, Luigi Botto has amassed a debt of 80 million euros, or $100 million at current exchange rates. This will now be repaid to the banks, which have agreed to inject the 10 million euros in the company over the next seven years. The group, based in Biella, includes Lanificio Luigi Botto, Lanificio Fratelli Fila 1911, Gartex and Filatura di Crosa.

At the end of last year, the group announced it was not going to participate in the February edition of Italy’s Pitti Filati exhibit, creating a stir in the industry.

“We’ll be showing at the upcoming July edition,” Leone said. “Our exports to the U.S. dropped 50 percent as a consequence of the strong euro, but we hope to expand in the Far East, which will increasingly become one of the most significant areas for us.”

As for China, Leone, who believes in production entirely made in Italy, said, “The Chinese offer to regulate their exports is welcome, but not enough. In any case, taxes are a transitory tool and do not cut the problem at its roots. On a positive note, China is also a potential client. The problems it causes today could turn into advantages tomorrow.”

Leone said exports currently account for 70 percent of sales.

Last year, the group reported sales of 100 million euros, or $125 million, a 20 percent drop compared with 2003. Leone said production never stopped during the two-year financial crisis, which resulted in laying off 40 percent of the group’s employees, or about 350 people. For 2005, Leone said he is hoping to maintain sales in line with last year, followed by growth in 2006 and 2007.

This story first appeared in the May 31, 2005 issue of WWD.  Subscribe Today.

At Pitti Filati in July, Luigi Botto will present its new XT-Four wool yarn that is more elastic, more pliable and has greater pilling resistance. “We’ve expanded this technology to brushed cashmere,” said Leone.

Also, Luigi Botto is banking on a cross-dyeing technique, whereby colors are mixed at the end of the process, offering more diversity.

“This saves time, and there is no need for stocking,” Leone said. “The client is not obliged to order 300 kilos per color in advance, which was our minimum before. We are able to deliver in less than 30 days, compared to 60 days before, and the amounts can be small, even 10 or 20 kilos.”