MILAN Keep calm and wave the “Made in Italy” flag, along the way carefully balancing markets and product categories to deflect potential slowdowns as they come.

This appears to be the mantra of luxury brand executives here as they try to look past gloomy forecasts ahead of Milan Fashion Week, which officially runs from today to Feb. 24, but kicked off Tuesday with United Colors of Benetton’s first runway show, under the creative direction of Jean-Charles de Castelbajac.

Italy has officially entered recession as output shrank 0.2 percent in the three months through December last year, following a 0.1 percent decline in the previous quarter, statistics agency Istat said at the end of January. Although observers say the recession could be short-lived and the market reaction has been limited, Italy’s populist government, which has been sparring with France’s over several issues, including migrant flows and siding with the “yellow vests” movement, has blamed previous leaders for dragging down the economy.

Earlier this month the European Commission slashed its growth forecasts for the main economies of the euro zone, including Germany — a leading market for Italian companies — warning that uncertainties related to Brexit, tensions between the U.S. and China over custom duties and a possible slowdown in China could threaten to worsen the outlook. On the other hand, the European Union and Japan’s Economic Partnership Agreement came into force on Feb. 1, removing trade barriers.

The agreement, said Aeffe executive chairman Massimo Ferretti, is “an important step forward in creating a free trade market, but it especially represents an element of reprieve after the worries tied to the U.S. and China tensions. This is a unique opportunity that will allow to realign with a market that is important and qualified when it comes to ready-to-wear and that will have positive economic consequences.”

Asia, driven by a strong performance in Greater China, helped boost Aeffe’s revenues last year, which climbed 10.9 percent to 346.6 million euros. Aeffe, publicly listed on Italy’s Star segment of the Italian Bourse, comprises the Alberta Ferretti, Philosophy di Lorenzo Serafini, Moschino and Pollini brands and produces and distributes the Jeremy Scott and Cédric Charlier labels. Ferretti said the company is particularly focused on its e-commerce channel in the wake of the agreement with Triboo inked last year, internalizing “some of the crucial online business phases” for Moschino, Alberta Ferretti and Philosophy di Lorenzo Serafini “aimed at improving logistics and in general the services linked to this channel.”

While the group continues to focus on the strategic U.S. and European markets, it is also investing in collaborations with WeChat, Sina Weibo, TMall-Luxury Pavilion and Toplife.

Gianni Castiglioni, ceo of Plan C, launched last year and designed by his daughter Carolina, said that Japan’s tax issue could be an element that could change the accessories scene and “become more desirable for tourists.” This, however, will not change Plan C’s pricing strategies.” The company already has a strong foothold in Japan — a market the Castiglionis know well from their years building Marni, designed by Consuelo Castiglioni until her exit from the brand, controlled by Renzo Rosso’s OTB group, in 2016. The ceo said he expects VAT taxes in Japan to increase in the near future.

Michele Norsa, vice president of the Missoni Group, concurred with Castiglioni, expecting free trade in Japan will benefit tourism in the region. “Any customs’ reduction is always positive and allows prices to be more aligned,” noted Norsa.

The executive downplayed the recession in Italy, saying it is unsurprising and “very modest for the time being” and pointing to how Italian bonds had already been penalized months ago. Norsa believes Italy can expect more growth through tourist spending rather than local spending, with a redistribution of Chinese tourists in Europe in light of a slowdown in the first half in cities such as Paris and London. Norsa said he was more concerned about the second quarter of the year, which will be affected by the impact of the European elections in May, Brexit and changes sweeping over France.

“Europe will be the most difficult market in 2019. Political campaigns don’t help consumer spending,” he contended.

He ticked off “very positive consumer spending in China,” also propelled by the yuan-dollar devaluation in the past 12 months, reducing the gap between Chinese and European prices, and an excellent start to the year. In the wake of the Trump administration’s decision to suspend the nuclear arms control treaty with Russia, Norsa said that “the arms race is generally viewed as a leverage to help grow the economy and create jobs,” but he was more interested in shining the light on the “technological war,” which will soon be won by China, he believes.

At Missoni, which will show on Feb. 23 at Milan’s ice skating rink, Norsa has been focusing on the brand’s retail network, with five store openings planned for the second half of the year with a focus on the U.S. and Asia. There are 15 existing directly operated stores and 44 franchised units globally. Another franchised venue will open in Bangkok in the next few weeks.

Michele, Norsa attends a press conference in Milan, Italy, . The family-owned Missoni fashion house has announced that the Italian investment fund FSI will take a 41.2 percent stake to help expand the business. Angela Missoni said Friday that the family will retain a 58.8 percent stake and operational control of the knitwear brand famed for its intricate weaves and colorful designsMissoni, Milan, Italy - 15 Jun 2018

Michele Norsa  Luca Bruno/AP/REX/Shutterstock

The Missoni Home division is also “a big project now,” as there are plans to expand the product offer and residential projects, he said.

A new Missoni Home showroom was inaugurated in Paris on Boulevard Saint-Germain in Paris at the end of January during the lifestyle and design trade show Maison & Objet. Norsa also pointed to the future opportunities presented by the M Missoni line, now designed by Margherita Missoni. “She has been doing an excellent job, it’s very dynamic and attractive,” said Norsa of the line, whose first collection will bow in May.

While admitting the fashion system will face “important challenges” in 2019, including Brexit and its impact on the stability of markets, Toni Scervino, chief executive officer of Ermanno Scervino, believes Made in Italy production will weather the times “because it’s a strong brand, whose appeal in terms of exports is indisputable and whose quality in terms of raw materials and know-how is inimitable. The other big challenge will be sustainability, at the level of production and environment.”

He said the theme is of the moment and inevitable. “To produce fashion conscientiously and in a sustainable way is a challenge that the world of fashion is starting to tackle and that will deeply influence the world of fashion tomorrow, with results that, surely, will be very interesting and innovative. From our side, the house has already been engaged for some time on this with a production that is entirely made in Italy and with excellent standards.”

In 2019, the company will open new stores, in particular in the Far East, and is planning the roll out of its first fragrance.

Francesco Freschi, general manager at Etro, is also taking things in stride. “Our industry is influenced by outside situations, but it’s all fluid,” he said. “One can’t really foresee the outcome of Brexit and this creeping recession, the political uncertainties and [questions over] China surely have an impact, but we are used to living with unexpected macro-economic events.”

Freschi also highlighted how currency fluctuations impact Russian and Turkish consumers, for example. “That said, we are a family-owned company and we think long-term, we have a long-term vision.”

The executive also believes that Etro’s well-balanced markets help offset any problems that might arise. “Europe represents 30 percent of sales, Asia another 30 percent and the U.S. accounts for 20 percent, with the rest of the world representing the remaining 20 percent,” he said. The removal of trade barriers in Japan will make it even easier to work in that market, which is already a very strong one for Etro. “More freedom and ending limitations on the circulation of merchandise can only be positive,” said Freschi, adding that the  50th anniversary of the company last year was a moment to reflect “on the second chapter of the next 50 years.”

This includes consolidating its positioning with loyal customers, but also expanding its customer base, investing in communication and marketing, strengthening the experience in stores and increasing digital content. The company counts more than 200 stores, and it is also mapping out operations with its wholesale partners. “We want to increase Etro’s visibility, create interest, ink new collaborations and co-branding deals and perhaps offer some see-now-buy now capsules.”

As reported, aiming for newness has led Etro to choose a new venue for the show, which will be held on Feb. 22 at Italy’s largest music conservatory, Giuseppe Verdi, moving away from its staple location at Milan’s ice skating rink.



A preview look of the fall collection by Etro  courtesy image

Gian Giacomo Ferraris, ceo of Roberto Cavalli, characterized this season’s fashion show, to be held on Feb. 23, as of the “utmost importance” as it takes place during the finalization of the company’s sale. He expressed confidence in creative director Paul Surridge. As reported, sources say designer Philipp Plein is especially keen to take control of the brand from Italian private equity fund Clessidra SGR.

In general, Ferraris said the “overall climate for the luxury business remains very competitive” and that the company is working on extending its product offer with capsule collections and residential, interior design and lifestyle projects, including the first Roberto Cavalli hotel, called Aykon, in a partnership with Dico International, the strategic investment arm of the Dubai-based Damac property developer. The first hotel is expected to be completed in 2023 in Dubai.

He cited the “less traditional Cavalli silhouette” of the V1PER Sneakers, more men’s wear and casual styles, eyeing the all-important Asian market. “These activities are supporting our rollout in China and South East Asia,” he noted, such as the new Hong Kong pop-up store opened last December.

Roberto Cavalli

A Roberto Cavalli V1PER sneaker.  Courtesy image


“Retail remains a challenging topic as shopping behavior is changing,” said Ferraris. “We see a decrease of footfall in our stores but the audience that is entering the stores has very often already a clear idea what they want. Today the consumer journey starts much earlier, via mobile or other digital channels not in the stores anymore.”

The shopping directions taken in advance are then “verified in stores, confirmed or postponed. The role of store personnel becomes more crucial then ever as selling capability, product know-how and dedication to service are crucial for retail excellence,” he added.

Ferraris said the focus on digital channels “remains strong and with a double-digit revenue growth of our new e-commerce platform a significant part of our marketing investment will flow in digital and social media activities. Our campaign with Kendall Jenner is highlighting this direction.”

Roberta Benaglia, founding partner and ceo of Italian private equity fund Style Capital SGR, which has a stake in MSGM and in California-based denim brand Re/Done, among others, had a different take on these macroeconomic issues. “The recession in Europe and Italy actually offers more opportunities for the more capitalized companies to inject more strength and financial support to overcome difficulties. For us, it’s an interesting moment to support companies so that they can take advantage of the moment and be strengthened.”

Benaglia contended that now “those that have financial muscle have market opportunities. It’s a complex moment for London, it’s crazy, but locations that would be difficult to even approach are now offering more interesting conditions.”

Her fund has a long-term approach, she said, and is convinced that the recession will be over in a five-year period. “It’s cyclical. I see it as a moment to inject capital, catch opportunities and market voids. But one must also be cautious because the markets have lost a lot and many investors are flocking to private equities and there is a lot of liquidity. Even if multiples are lower, valuations are very high. There are many M&As at higher valuations because there is a scarcity of targets and the crisis has led to less-performing companies.”

Buying at higher valuations is the risk, she said. “We are unconventional, we don’t buy at auctions, we don’t buy against competing funds, we look at deals that are outside the schemes, at smaller companies that have more potential and that arena is less crowded. We try to sell know-how and skills, so we are not only financial partners.”

Benaglia said the fund has earmarked “at least two acquisitions” in 2019, with investments between 30 million and 50 million euros in “either two medium-size companies or in one bigger firm.”

As for MSGM, Benaglia said the focus is on a global approach “beyond the dynamics of a single market, which would be very dangerous. China is working well but there is a risk of a slowdown.”

Investments are now channeled into building the brand’s bags and shoes categories to balance its ready-to-wear. A new MSGM store concept was unveiled in London last fall and the company plans to invest in retail in a directional way in Europe, the U.S. and Asia. Three stores opened in China last year and four additional units will open in the first half, followed by another four in the second half. Units in Singapore, Macao and Taiwan are also in the pipeline.

“More balanced and complete geographies and categories can protect you from risks in moments of difficulties,” she remarked.



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