Gianfranco Ferré Owners Sound Off

After 18 months of silence, the management has decided it is time to talk.

MILAN — After 18 months of silence, the management of Gianfranco Ferré has decided it is time to talk.

This story first appeared in the September 24, 2012 issue of WWD.  Subscribe Today.

Reacting to reports that the brand’s new owners, Paris Group, plan to move the business to Dubai and to leave the company’s historic Milanese via Pontaccio headquarters following the show Monday, Ferré’s new chief executive officer, Mohamad Iyad Jalab, told WWD: “We are not leaving via Pontaccio of our own free will; we were pushed out.”

As reported, a legal battle is taking place over the Ferré brand. The state-appointed commissioners who oversaw the company’s sale in February 2011 after two years of state-controlled bankruptcy protection have turned to a Milan court seeking to confiscate the brand to avoid further deterioration of its assets. They believe the label has not been developed as promised by its new owners at the time of the sale. In turn, Paris Group has sued the commissioners, asking for damages and payment of “nonexisting credits.” Paris Group is seeking 4 million euros, or $5.1 million at current exchange.

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Jalab said the commissioners wrote to the late designer’s brother, Alberto Ferré, before the acquisition to say that the new buyers would not be staying in the building — a fact that has been confirmed by sources close to the commissioners, who reasoned that a higher rent under better terms could potentially be secured. “We tried to negotiate a new lease, and even buy the palazzo way above market prices, but we could not spend more on the building than the business itself. We have proposed to create a museum, but our offers were refused and we were asked to leave in June,” said Jalab, who managed to negotiate an extension until after the spring show Monday.

The ceo said the company is “talking with three major show organizers” to set up the next show in another location, likely in the central Duomo area or at the Castello Sforzesco. He also said there are plans to continue with the designers tapped to revive the brand, Stefano Citron and Federico Piaggi. “We are very proud of them, they are doing a great job and they carry forward the spirit” of the late Ferré, he said.

Sources said Friday that the commissioners continue to believe Paris Group “disregarded growth plans and did not relaunch the brand.”

Paris Group has also been accused of closing Ferré stores around the world and, in particular, the long-standing unit in Milan’s Via Sant’Andrea. Jalab contended the commissioners supported these closures and they were aware that the Milan lease was not going to be renewed by the building’s owners even before the sale. He added that a new Ferré store will open in Milan by the end of the year.

Jalab underscored the fact that Paris Group has “no intention to move the brand to another region, and [plans] to maintain it in Italy, and in Milan, in particular.” He also said that there are no plans to dismantle the ITC plant in Bologna.

He also questioned why, before the sale, the commissioners signed a number of licenses for the brand with an offshore company based in the Virgin Islands “with contractual conditions well below market value.”

The license with that company, called Lure Ltd., allowed the distribution of any kind of product, including tiles, in China and 14 other countries in the Far East, he said. “[It’s] a market that through licenses used to generate profits of 15 million euros [$19.5 million at current exchange] and that the commissioners transformed into one valued at 40,000 euros, [$52,000] yearly,” said Jalab, pointing to Lure Ltd.’s right to use the brand’s name until 2026, with automatic renewal. “Is this the way to preserve the spirit of the designer?” wondered Jalab, lamenting, “continuous attacks by everyone” and admitting regrets about investing in Italy. “Why not help investors to do business in Italy?”

Jalab said Paris Group has invested 80 million euros, or $104 million, so far in the fashion house, as certified by Deloitte & Touche, Paris, and paid Ferré’s debts.

Dubai-based Paris Group was founded by Abdulkader Sankari 30 years ago, and has 250 stores and 4,000 employees in 35 countries. It manages partnerships with brands including Versace, Hugo Boss and Balmain. Jalab said the group is negotiating to acquire another international fashion brand, although he declined to provide details.