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Loro Piana Buys 60% of Vicuna Firm Sanin

Acquisition is part of the group's efforts to invest in the research and development of the finest yarns and fabrics.

ROME — Loro Piana has acquired 60 percent of vicuna firm Sanin SA as part of the Italian group’s efforts to invest in the research and development of the finest yarns and fabrics.

This story first appeared in the May 28, 2013 issue of WWD.  Subscribe Today.

Sanin is an Argentinean company that owns the right to shear wild vicunas living on a territory of 210,000 acres in the province of Catamarca, Argentina. During a press conference held Friday at the stunning Villa Medici here, which houses the Academy of France and stands on the Pincian hill overlooking the Spanish Steps, chief executive officer Pier Luigi Loro Piana said the company had invested $1.6 million in the project, but underscored that it should not be seen as a financial investment.

“This is not about profit but about being able to produce the best fabric in the world, also in memory of our father [Franco], who did it back in the 1960s,” said the executive, donning a blue vicuna jacket. “We took a majority stake, which guarantees continuity and buying in the long term. This also has a social relevance, as we create employment.”

The company has actively invested in safeguarding the vicuna, a member of the camel family that lives wild in the Andes, a breed once sacred to the Incas and that was on its way to extinction between the late 16th century and the Seventies, almost wiped out by poachers. The company established the Franco Loro Piana Reserve in honor of the father of chairman Pier Luigi and his brother Sergio, ceo, in the Lucana area in Peru in 2008. Through controlled shearing, in four years the number of animals in the Peruvian reserve has doubled to 2,000.

The Argentinean breed is bigger and has finer, lighter hair compared with the Peruvian vicuna, and for this reason Loro Piana characterized the new development as a breakthrough, as it will allow the production of fabrics in a “honey, almost white” color. The first white vicuna products will be in stores in 2014. He said the company has 99 product categories made with vicuna, which costs five to six times more than cashmere. Despite this, Loro Piana struggles to meet consumer demand. The total raw fiber obtained annually reaches 13,200 to 17,600 pounds compared with the 22 million pounds of cashmere and the 1.1 billion pounds of wool. Loro Piana produces 220 pounds of vicuna, which are entirely absorbed by its own verticalized manufacture. “The main market for vicuna is the U.S., Russians have fallen in love with it, and Asians see it as exotic, as they are so used to cashmere,” said Loro Piana.

Products made with vicuna account for between 1 and 1.5 percent of Loro Piana sales. The Italian luxury group closed 2012 with sales of 630 million euros, or $806.4 million at average exchange, up 13.1 percent compared with the previous year. “The year 2012 was very good, even better than 2011. We have reaped the rewards of steps taken in the past, and we feel we are going in the right direction,” said Loro Piana, conceding that exports, which accounted for 85 percent of sales, helped deliver the strong performance. Europe accounted for 48 percent of total revenues and Asia for 31 percent of sales. China showed a 34 percent gain. Canada and the U.S. accounted for 22 percent of sales, and the latter posted a 24 percent increase.

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“The U.S. market is very positive for us. In terms of the number of customers, Americans top the list, followed by the Chinese,” said Loro Piana, touting a balanced distribution of sales around the world and avoiding a single focus on Asia. There are 18 stores in the U.S., where the company plans to open a third unit in Las Vegas this year, in addition to expanding the New York boutique and renovating its Bal Harbor, Fla., venue. The group’s retail channel, which comprises 140 directly operated stores, showed a 20 percent increase in 2012.

In 2013, the group plans to open a total of 12 new or refurbished stores. “It’s difficult to provide forecasts, but expectations for the year are quite positive; perhaps we won’t see a jump, but we hope to once again post a double-digit gain, despite the challenges. The second part of 2013 is the most important for us in terms of seasonality,” said Loro Piana.

The executive reiterated that the family-owned company is not looking at a listing. “We have the means to grow independently and carry out our next three-year plans. Never say never, but we see no need to go public,” said Loro Piana, who was in Rome also to sponsor with his company the historical Piazza di Siena horse jumping competition, which ended Sunday.