MILAN — Italia Independent is going through some growing pains.
This story first appeared in the September 12, 2016 issue of WWD. Subscribe Today.
The company is launching a capital increase of 15 million euros, or $17 million at current exchange, and is fine tuning its strategies after reporting disappointing first-half figures.
“I expect a lot from management in this important restructuring phase not only to correct past mistakes but to strengthen — also with the arrival of new key figures — the project of recovery we have undertaken, as well as the confidence that I have in the company, which is confirmed by the capital increase just announced,” cofounder Lapo Elkann told WWD. “We are working on the relaunch of Italia Independent, recovering the original drive for creativity and innovation together with a renewed team spirit in light of the financial steps that we are about to take and that will provide a solid foundation to build the future.”
One of the heirs of the Agnelli family, Elkann, who is to appear in a 10-page spread in Vanity Fair’s October issue interviewed by Mark Seal, has pledged to guarantee the capital increase. “This proves that he believes in the project and is a strong signal,” said cofounder and chief executive officer Andrea Tessitore.
In the six months ended June 30, Italia Independent reported a net loss of 2.6 million euros, or $2.9 million, compared with 727,000 euros, or $850,590, in the same period in 2015.
Revenues fell 34.8 percent to 16.3 million euros, or $18.2 million, compared with 25 million euros, or $29.2 million, in first half of the previous year.
“The capital increase is part of a strategy to improve efficiency and relaunch the brand,” said Tessitore. He said the performance of the company was hurt by a more complex and competitive business environment in 2016, as well as an ever-increasing number of brands in the eyewear sector. Eyewear accounted for 77.4 percent of total Italia Independent sales in the first half.
The executive pointed to a slower return on investments made by the group in the past few years, which were below expectations, mainly because of market changes. The efforts to expand around the world have also taken a toll. “We have to reassess our investments, especially outside of Italy, and evaluate the profitability of stores.”
In the first half, Italy accounted for 47.1 percent of sales while the Americas represented 8.1 percent of revenues. The company plans to focus on its stronger markets including Spain, which accounts for 9.6 percent of sales, France (4.7 percent), and Germany (1.8 percent).
Tessitore pointed to a product surplus in the wholesale distribution channel of glasses under the Eyeye moniker, which had “extraordinary success in Italy, almost more in terms of optical than sunglass models,” but that fared less well outside the country. He attributed this to marketing and commercial strategies, as well as more brand awareness and visibility for the brand locally. Eyeye is a family of products at entry price level in a nod to fast fashion.
Despite this, Tessitore touted new agreements that are providing positive signs, such as the collaboration with Adidas Originals, which he characterized as an “important growth driver.” The two companies will hold an event Sept. 21 in Milan during Milan Fashion Week.
Tessitore said Italia Independent has been “analyzing its mistakes and working on rectifying them. We have to return to producing distinctive and unique products and invest in research, materials and treatments.” At the same time, he said the goal is to “give depth” to strong collaborations. Case in point, in addition to Adidas, the company has teamed with Industrie Testi for a jewelry line, unveiled at Vicenzaoro this month. Eyewear, however, will remain core.
Italia Independent was launched in January 2007 and listed on the AIM segment of the Italian Stock Exchange for small companies in the summer of 2013. Asked if the company was considering a delisting, Tessitore said that option is not on the table.
The third cofounder of Italia Independent, Giovanni Accongiagioco, left earlier this year.