It’s been 80 years since Salvatore Ferragamo set up his headquarters in Florence at the frescoed Palazzo Spini Feroni, and his passion for and commitment to his work still reverberate in the corridors of the building — echoed in the words of his family and those of chief executive officer Eraldo Poletto.
“It’s as if Salvatore has entered in my DNA,” said Poletto in an interview shortly after the first investors’ day at the company’s palazzo. The Ferragamo family, from chairman Ferruccio to his siblings Leonardo, Fulvia and Giovanna, their mother Wanda, and the three members of the third generation active in the firm — James, Angelica and Diego — all attended the event. “They came to cheer and show their support. The family is an asset, they love this brand, the history of their father and grandfather. We mention Salvatore all the time; he is the living soul in the organization,” observed Poletto. “They have heart and passion.”
These are qualities not lacking in Poletto, who is spearheading the company’s next phase, succeeding last August Michele Norsa, who led the house for a decade and through its public listing in 2011.
At the meeting, Poletto and Ferruccio Ferragamo also struck down rumors that the company was for sale. “We are not even thinking about it,” the chairman emphasized.
Despite the surroundings and the legacy, Poletto emphasized his forward-looking plans, with the goal to reinvigorate Ferragamo’s original modernity. “He was very modern. Shoes were not fashion before him, they were just comfortable and useful,” said the affable and eloquent executive, who joined Ferragamo after leading Furla’s expansion around the world for almost six years. He was previously president of strategic development and international business worldwide at Retail Brand Alliance Inc., parent of Brooks Brothers. Poletto exited Furla in November 2012 for a brief stint as ceo of Alfred Dunhill, but returned to the Italian accessories firm in spring 2013.
One of Poletto’s first decisions at Ferragamo was to name a trifecta of designers rather than one single creative director, in the wake of Massimiliano Giornetti’s exit last March. Poletto opted to appoint Paul Andrew, Fulvio Rigoni and Guillaume Meilland in charge of women’s shoes, women’s ready-to-wear and men’s rtw, respectively.
“Each category, although I don’t really like this word, is very different, and shoes even more so. I prefer to elevate the level of expertise in each division and then harmonize everything with merchandising, marketing and a strong art director to set the tone of the brand. It’s about an attitude,” mused Poletto.
“In some cases, you see a brand working [as long as] the designer lasts. Here, the brand is more important than the ceo — imagine if it is not more important than a creative director. I don’t want someone to come here and make Ferragamo black because he believes in black,” he said, as an example. “Designers who work for a brand eventually have the ambition to have or design for their own brand, but it’s not like that here. We don’t need that — we must share the pillar assets of the company. The label is the creative director, and it relies on the strong expertise of each designer under a very unified aesthetic. We all wear the Ferragamo T-shirt. I can’t wear the Eraldo Poletto T-shirt.”
Footwear is the company’s core business, representing 42 percent of revenues, followed by leather goods with 37 percent. Andrew, said Poletto, is bringing back the brand’s colors, shapes and fun. The collection that will be in stores in April, presented at the headquarters under embargo, is a tribute to some of the late founder’s inventions, with a modern twist.
Poletto also sees potential in the brand’s leather-goods division, and aims to appoint a handbag designer, “a specialist,” who will work with Rigoni, Meilland and Andrew.
Asked what he felt was missing in this division, Poletto said it was rather “about looking at what can be done,” and about “having more courage” in design, creating a “more iconic” bag. One such design is the Thalia bag, which he called his “baby,” a small, constructed bag with a fold-over top and magnetic gancio closure, as well as a gold-tone chain shoulder strap and accordion details at the sides. He also believes there is a “disproportion” in the small-leather-goods business, given the company’s solid and global travel retail network, with a presence in 78 airports, characterizing this as an “incredible opportunity.”
Travel retail also offers a channel to further develop the textile accessories division in an increasingly crowded market. In Asia and the Middle East, foulards are fashion accessories and, despite the lagging tie business, Ferragamo continues to be a “leader” in that category, Poletto contended, and “a specialist” in the former. “We are good, but we have to reassess what we know how to do,” he said simply.
He also plans to expand rtw with wardrobe essentials.
“I am a retailer and think of a full merchandising approach,” he noted. “We don’t want to talk about seasons anymore, we want to continuously create excitement in stores, simplifying the collections,” said Poletto, adding that the company cut 36 percent of stockkeeping units with the spring collection and 30 percent of sku’s for the following season. “We must create demand and excitement, and not follow the market.”
Ahead of the fashion show in Milan on Feb. 26, Poletto admitted that he, along with his peers, is evaluating the state of the industry and ways to ignite interest in the presentations. He said it’s still too early to discuss possible developments, whether combined men’s and women’s shows or seasonless collections.
“We are thinking about the future and the calendar of shows, what could be next and we want to be innovative,” he said. “Fashion Week should be a moment of celebration of the brands, a moment to enjoy.”
Aware of the power of digital communication, Poletto is pushing forward with the launch of a new web site this year to make it more functional, improve navigation and as a social media tool. “We are only investing in digital communication in China in 2017 because of the importance of WeChat there,” said Poletto. Ferragamo opened its online store in China in December and plans to go omnichannel worldwide some time this year.
While leveraging Ferragamo’s strong brand awareness, cautious brand extension and global growth over the past years, Poletto characterized the brand as a “sleeping beauty.”
And he’s making it his mission to stir things up. The goal, he said, is to expand the company at “twice the rate of market growth” in the medium term, or three to four years by improving like-for-like sales, product assortments, gross margin and earnings before interest, taxes, depreciation and amortization with tight control of operating expenses.
As he stated, Poletto considers himself a retailer and is focused on reviewing the brand’s network of stores without changing the concept of the locations, but making adjustments on the layout or the design, all intended to improve functionality and performance, while making them “warmer.”
“In the past, the industry tried to create beautiful stores,” he said, but “we must conceive venues that can be modified depending on the need and to exalt the product offer. They must be flexible.”
Poletto also wears the retailer’s cap when working with department stores. “If you have a retail mentality with wholesalers, you are more successful.” In the U.S., he said, Ferragamo has a “very fast program of reassortment. We work with them for replenishment of sizes to push sales to have a competitive advantage,” observed the executive.
The company in 2016 reported a 1 percent gain in revenues to 1.44 billion euros, or $1.58 billion at average exchange. In the next three to four years, Ferragamo plans to spend 85 million euros, or $91.6 million, in capital expenditures.
Poletto is working for a company that is flexible, “nimble,” and that can react depending on the circumstances. “That is fundamental,” he said. “You must be better than others in finding solutions.” Asked about the American market, which accounts for 24 percent of sales, following the elections, he said “nobody knows what will happen. I believe in democracy and that everything will be balanced. I can’t manage the company on the basis of what might happen, but on how reactive we can be.”