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Tough Market Challenges Kids Brands in Italy

The local children’s fashion industry has suffered more than the adult fashion industry.

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MILAN — Where to sell? For some Italian children’s wear companies, the answer is: not in Italy. Here, the local children’s fashion industry has suffered more than the adult fashion industry, because the domestic economy remains stagnant and only about 30 percent of the country’s kids’ wear is exported.

This figure has remained relatively stable over the past six years, according to Sistema Moda Italia and ISTAT, the Italian statistics institute, which reported in June 2013 the sector’s turnover in 2012 at 2.6 billion euros, or about $3.6 billion at current exchange, a 0.6 percent drop from the previous year.

Moschino, which for many years had shown at the biannual Florentine kids’ fair Pitti Bimbo, this year opted out. The Moschino Baby Kid Teen line represents about 4 percent of Moschino’s total turnover, and counts about 250 sales points, two-thirds of them outside Italy, said Moschino chief executive officer Alessandro Varisco. He added that the kids’ collection had seen total sales rise 10 percent on-year in 2013.

“The increase in sellout has been noticeable in all the international markets, from Russia to the Middle East to China,” Varisco said, noting the brand had invested heavily in China. “In addition to important pop-up projects and the inclusion of kids’ wear in some adult monobrand stores, in April we will open the first monobrand Moschino Baby Kid Teen in Macau, at the Venetian Hotel.”

Still, some foreign brands haven’t written Italy off: While acknowledging further expansion plans for China, Russia and the Middle East, Guess Inc. ceo and creative director Paul Marciano said Italy and France are his company’s biggest European markets overall.

“Today, Guess Kids represents a very small percentage of the business, but we are conscious that this business has huge potential — especially in today’s fashion landscape, where there are only a few international brands present in the market,” Marciano said. “Ideally Guess Kids should represent 10 percent of our Guess brand business and this is our long-term goal.”

Internationally, the brand has 72 stand-alone Guess Kids stores, and in the U.S., wholesale distribution reaches 600 doors, 300 of which are Macy’s.

While the Italian children’s fashion market remains tough, Italy’s Pitti Bimbo fair remains a key meeting place for the sector and points to healthier international markets, something the local industry is counting on more than ever.

At the 78th edition of Pitti Bimbo, 463 exhibitors — 189 of which are from outside Italy — will set up shop from Jan. 16 to 18 at Fortezza da Basso in Florence. Pitti Immagine ceo Raffaello Napoleone said this year Pitti Bimbo is reducing the total area of the fair, making it “more dense,” in response to exhibitors’ requests to cut costs.

Napoleone added that the fair draws a lot of foreign buyers as well, and that Pitti makes a pointed effort to attract them, which is a draw for local brands seeking international exposure.

The fair is also increasing the number of children’s toys and furniture brands present, however. “That area has always been present, but in the past there was no specific development strategy,” Napoleone noted.

Versace’s Young Versace is among the fair’s returning brands. “Pitti Bimbo is an essential meeting place for the sector, as shown by the growing number of buyers and visitors present over the past several seasons,” said Versace ceo Gian Giacomo Ferraris. He said the company’s children’s line is mainly distributed through franchising partners, with key markets in Russia, the Middle East, China and the U.K., and noted that the brand’s turnover for this year is estimated at around 11 million euros, or about $15 million.

“That’s still a small percentage of total turnover — 2.3 percent — but it’s perfectly in line with the goals set at the time the line was launched,” Ferraris said. “For 2014, we envision a controlled growth of between 10 and 15 percent.”

Missoni has been a regular exhibitor at Pitti Bimbo for the past several years, and ceo Alberto Piantoni said the company has experienced positive results at the fair. “We expect to continue increasing the number of clients from emerging markets,” he said, citing Russia and the Middle East as important business hubs and noting the line has seen double-digit growth in the past year. “In Europe, the collection is getting good reviews, too — especially in Germany and northern Europe.”

Missoni Kids — produced in Italy — accounts for about 3 percent of Missoni sales, with about 250 sales points worldwide, spread across monobrand stores, department stores and specialty retailers. “It’s a niche within our niche segment,” said Piantoni, noting that the children’s line picks up many of the materials used in the women’s line and shares the same color palette and mood. Selling points include “color, irony, unconventional luxury and the rediscovery of more ‘true’ values, such as nature, being with family and freedom and spontaneity.”

This edition of Pitti Bimbo will mark the debut of MSGM’s kids’ line: The spirited, edgy Italian fashion brand known for bright colors and rich textures announced a production and distribution agreement with Daddato SpA in December, targeting boys and girls aged two to 12.

“[The collection] is for a cool kid who’s also a little brazen and irreverent,” said MSGM creative director Massimo Giorgetti. “At the fair, the boys’ and girls’ summer collection will be shown, along with a unisex line that kind of sums up the whole feel and all the trends.” Echoing the adult collections, the children’s lines will use materials such as printed Neoprene and brocade.

MSGM’s children’s wear will be distributed in about 180 to 200 upscale specialty stores, Giorgetti said, all across Europe and in Russia, China and the Middle East, with Japan to follow soon.

Les Lutins, a French brand returning to Pitti Bimbo for the second year, focuses exclusively on babies ages three to 24 months, with products in soft colors and Ecotex-certified cashmere. Newborn clothes make up a strong subcategory within children’s wear, even in a tougher economy, said founder Catherine Artzet, who started her business two-and-a-half years ago.

“Les Lutins was the name of my school in Alsace, France,” she said. “I wanted to revisit the kind of children’s wear I had when I was a baby — it’s very connected to my childhood, quite nostalgic.”

Artzet said her first experience at Pitti Bimbo had been “extremely rewarding,” as she picked up a new agent for the German market and was able to develop exports. Currently, Les Lutins has about 50 points of sale, in Europe, the U.S., Canada, Saudi Arabia and Hong Kong. This year, Artzet plans to attend the Japanese Playtime fair in Tokyo to boost distribution in Asia. “We’re also targeting Eastern Europe,” she added.

Prices for gloves, booties and slippers hover around 40 to 50 euros, or about $55 to $68, while cardigans, vests and jackets sell for about 80 to 120 euros, or $110 to $164, and blankets 100 to 150 euros, or $137 to $205. A special baby bunting is the most expensive item at 250 euros, or about $341.

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