MILAN — Family-owned fashion house Etro is clocking double-digit growth as it embarks on a retail expansion plan to roll out at least 20 stores over the next few years in cities from Manhasset to Mumbai.
Etro’s revenues for the 12 months ended Dec. 31 rose 24 percent, to 230 million euros, or $287.5 million at average exchange rates for the period. Commercial manager Fabio Gnocchi forecasts that 2006 sales are on track to increase another 20 percent as the company continues to diversify into accessories and exploit untapped potential in markets like the Middle East and Russia.
“For us, sales growth isn’t what stresses us. What we are concerned with is maintaining our profit margin,” Gnocchi said. Etro declined to release profit figures.
Gnocchi, who has worked at the company for 23 years, said Etro plans to remain a privately held firm with the flexibility and agility to make important decisions, like closing an underperforming store or taking advantage of a real estate bargain. The Etro family has mulled the idea of an initial public offering in the past, but decided it wasn’t in the best interests of the company, Gnocchi said.
“We’ve always taken a step-by-step strategy. Because we don’t have to answer to anyone but ourselves and we don’t have to answer to shareholders…[we can] decide where we want to go, what we want to do and how we do it,” he said.
Unlike in many other family-run companies in Italy, in Etro, each family member has a distinct role. President Gerolamo Etro, or Gimmo, founded the company in 1968 and oversees all the operations now run by his children. Veronica designs women’s wear and her brother Kean does the men’s collections. Ippolito is the company’s chief financial officer and Jacopo manages the home furnishing line, textiles and the fast-growing accessories division, which is increasing the size of its product range to encompass a wider variety of styles beyond the brand’s trademark paisley bags.
Etro’s sales are fairly evenly divided geographically. Last year, sales in the U.S. vaulted 40 percent, to 50.6 million euros ($63.3 million), accounting for 22 percent of Etro’s turnover. Italy alone accounted for another 23 percent and other European countries, including Germany and Spain, particularly strong markets for Etro, accounted for 22 percent. Japan and the rest of Asia made up 20 percent.
Gnocchi said that kind of balance resulted from “years of very careful work” and he wants to keep it that way. Still, Etro is diversifying and moving into emerging markets, seeing encouraging results in Russia and the Middle East.
To wit, Etro just inked a deal with Dubai retailer Paris Gallery to roll out eight stores in the region between 2007 and 2008, adding to the three boutiques the partners have already opened. Target cities include Al-Khobar and Jeddah in Saudi Arabia, Doha in Qatar and Oman in Muscat. The Paris Gallery agreement also calls for a series of department store corners selling accessories and fragrances and a new retail concept featuring an in-store architect who will design Etro furnished homes for customers.
“That is a market that in this moment is seeing an incredible boom,” Gnocchi said. “Dubai is a constant construction project. They are continually building islands, planting palm trees and putting up shopping malls.”
Elsewhere in the world, Etro is still mulling a concept for a lifestyle and entertainment center called an Etro Lounge for Kuwait City, a project that’s been in the works with Villa Moda owner Sheikh Majed Al-Sabah for a couple of years. The lounge, part of a wider effort to rejuvenate the city’s downtown area, could open as early as next year, Gnocchi said.
Etro is also looking at a similar time frame to open its first Etro-branded resort in Bali, which would feature the house’s fabrics and furnishings as well as a spa. Gnocchi said Etro is going for a boutique hotel feel. He’d like to see guests arrive and find custom-selected clothing in their closets.
“It should be something extreme,” Gnocchi said.