Salvatore Ferragamo Resort 2021

MILAN — At the end of July, Italy officially entered a recession as the country’s National Institute for Statistics ISTAT released a study estimating that local gross domestic product was down 12.4 percent in the second quarter of 2020 compared to the previous quarter. Earlier that month, the European Union’s 27 national leaders agreed on a 750 billion euro Recovery Fund via grants and loans to help countries recover from the effects of the coronavirus  pandemic, and Italy is expected to be one of the main beneficiaries of the European Union agreement. Also, to support economic recovery, the Italian government has earmarked an injection of 25 billion euros for its 2020 budget, increasing its public deficit to 11.9 percent of its GDP — the highest of the euro zone.

But at the annual meeting of Catholic activist group Comunione e Liberazione at the end of August, Italy’s Minister of Economy Roberto Gualtieri struck an upbeat note, claiming that the country was showing the “conditions” for “an extremely strong rebound” in the third quarter of the year in the wake of the COVID-19 recession.

Against this background, challenges loom ahead for a number of Italian fashion companies, which may avail themselves of any help they can get. Storied men’s wear brand Corneliani, which in June submitted an application for admission to a composition with creditors procedure, is expected to receive a 10 million euro investment from the Italian government, the first fashion company to receive state funding under the “Re-Launch” Decree. This was developed by the Italian government to support the restart of the country after the global pandemic and includes the creation of a fund to support companies during the crisis. Controlled by Bahrain-based Investcorp, Corneliani is eyeing a revamp as the men’s wear sector is grappling with lackluster demand for tailored clothing, which is weighing on companies ranging from Boglioli to Pal Zileri.

Unemployment is also a concern as ISTAT at the end of July stated that Italy’s unemployment rate rose to 8.8 percent in June from an upwardly revised 8.3 percent the month before, as some 46,000 jobs were lost in the coronavirus crisis.

After months of strikes and protests against Roberto Cavalli’s planned decision to move its headquarters, more than 100 out of 170 employees at the brand’s complex outside Florence will not move to Milan and effectively lose their jobs in September. Roberto Cavalli is owned by the founder and chairman of Damac Properties, Hussain Sajwani, through his private investment company Vision Investments.

At the end of last year, Safilo Group revealed it would shed some 700 jobs this year as it revises its stable of licenses while it expects the exit of the Dior brand from Jan. 1 and that of the Fendi label beginning July 1. The eyewear group is also further developing its own brands, from Carrera to Polaroid and its online business.

The uncertainties are also fueling merger and acquisition rumors, with Kering said at one time or another to be circling Salvatore Ferragamo and Valentino, while speculation about the French group’s interest in Moncler has petered out.

The return at the end of May of Michele Norsa as director of the board and executive deputy chairman at Salvatore Ferragamo fanned new rumors about a possible change of ownership — a development the Ferragamo family has always denied.

Norsa is a partner in FSI, which in 2018 took a 41.2 percent stake in Missoni, and this link could open up new scenarios. Analysts, including Equita, observed that Maurizio Tamagnini, ceo of FSI, has in the past pointed to the fund as a possible aggregator of luxury brands, and that Ferragamo would fit with this idea of a fashion conglomerate.

The Etro family has also denied any interest in selling the namesake company, but rumors repeatedly surface about the possibility.

After an “excellent” 2019 in terms of M&A operations in all consumer sectors, from fashion and design to beauty and wine and food, Alessio Candi, in charge of M&A at Milan-based Pambianco Strategie d’Impresa, said he expects this year, in light of the COVID-19 pandemic, to see “an ongoing consolidation, no longer tied to the development, but rather to the necessary strengthening of the assets of many companies that will be forced to open their capital to survive.” This, Pambianco believes, will lead to “an increased polarization of the market between big players, that will capture more market shares and small players that will on the other hand have a hard time to be competitive.”

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