MILAN — “The planets aligned” when L Catterton and the Etro family agreed to set in motion the next phase of the Italian brand in July last year, believes Fabrizio Cardinali.
In his first interview since his official appointment last December as chief executive officer of Etro following the closing of a sale of a majority stake to L Catterton, Cardinali, who is also an investor, underscored the commitment of the fund and of the Etro family to turn around the company with a long-term view.
The first, most public step taken by Cardinali was to name Marco De Vincenzo creative director of the brand in May. The designer’s first collection for Etro will bow on Sept. 23 during Milan Fashion Week. The executive revealed that, in addition to the brand’s spring 2023 lineup, De Vincenzo will launch a small see now, buy now collection of upcycled archival fabrics to be immediately available exclusively on Mytheresa globally, as well as on Etro’s site.
This is representative of the goal to highlight Etro’s longtime sustainable practices and to approach a younger consumer through more contemporary tools. In addition to praising De Vincenzo’s “use of color, knowledge of fabrics and fashion,” Cardinali said that the designer is “a creative talent with so much good taste, but he is also very concrete, with his feet firmly planted on the ground. He is appreciative of the company’s history, and has realized that, while ahead on so many fronts, many initiatives were often not widely known to the general public.”
This includes highlighting Etro’s Made in Italy production and its sustainable practices. For example, Cardinali cited the BenEtroEssere collection in a denim fabric that combines organic cotton and elastane recycled in sustainable processes reducing energy consumption, water and polluting chemicals, which was first launched in 2002.
Kean Etro, who held the role of menswear designer before the arrival of De Vincenzo, started talking in 2001 about being green and responsible through his collections and shows, 20 years before environmental sustainability became a subject seriously taken into consideration by the international fashion industry. He launched alternative, certified sustainable materials under the BenEtroEssere label.
“Etro’s codes and values of art, culture, inclusion and self-expression are well-defined and these will stay on, but they will be developed in a more contemporary way,” said Cardinali. “L Catterton, Marco, I myself are cognizant of these codes and in tune with the Etro family in modernizing the brand” — hence the planetary alignment.
Founder Gerolamo “Gimmo” Etro was named the company’s chairman upon the arrival of L Catterton. His children Veronica, Kean and Jacopo were previously creative directors of the women’s, men’s and home collections, respectively.
Cardinali said the goal is to more than double Etro’s 2021 sales and reach 500 million euros in five years. “In the first six months of 2022 we’ve seen a double-digit growth in revenues,” said Cardinali, who leverages 25 years of experience in the luxury industry. He joined Etro from Dolce & Gabbana, where he held several roles with the company, and most recently served as chief operating officer and executive member of the board since June 2017.
Asked about a potential public listing, he said it was too early to think of an exit and underscored that L Catterton is looking at a long-term project for Etro. “We are excited and happy about the prospects,” observed Cardinali.
He is aware of the macroeconomic and political challenges, admitting “Russia was not a negligible market” for the brand and that China “was growing triple digits” while being dented by the “on and off” restrictions enforced to curb the COVID-19 pandemic.
Cardinali is focused on expanding business in Asia, where China is “under penetrated,” and in America.
There are seven directly operated stores and three outlets in China, and the plan is to open 20 units with a new partner. “We also tested Tmall and the response was excellent — we sold 200 bags in two hours during Chinese Valentine’s Day,” he remarked, noting that digital investments are a priority in China.
Etro will also launch a new site in February and is working on developing an omnichannel platform in 2023, as it continues to build its relations with e-tailers from Farfetch to Yoox Net-a-porter — deals that help add visibility to the brand.
He said “60 percent of the significant investments we are earmarking” will be channeled into digital communication, content and channels. “The brand is healthy, but the company needed additional dynamism at the level of innovation, product and communication,” said Cardinali.
This dynamism was reflected by Etro’s decision to approach the metaverse, holding a “Liquid Paisley” fashion show during Decentraland’s fashion week last March. “We don’t know what will happen in the future, but we saw the creation of 1,300 avatars in three hours.” He said that the company has already registered a “a growing interest” from younger consumers in the brand, which bodes well for his strategy to rejuvenate the customer base.
Etro will also unveil a new store concept in February to reflect De Vincenzo’s creativity. “We are changing the customer experience and our selling ceremony,” said Cardinali. The existing and new stores will be modeled after this blueprint.
There are 20 directly operated stores in Korea, which is a solid market, and 50 doors in Japan.
In the U.S., there are 13 stores, and the region accounts for almost 20 percent of sales. But Cardinali sees business “accelerating,” relying on strong brand awareness and equity. He is planning new openings, but was mum on details at this point.
He is also negotiating a joint venture agreement in the Middle East, another market he believes is underdeveloped and that has high potential. There is one store in Dubai, one in Qatar and one in Saudi Arabia.
In total and globally, Etro has 140 directly operated stores. In Europe, which is its biggest market, the brand is present in main cities and streets, from Old Bond Street in London to Via Montenapoleone in Milan, so the objective is to refurbish those boutiques.
Asked about the rising costs of energy, shipments and raw materials, Cardinali said that “right from the start, coinciding with the change in governance, we began a collaboration with suppliers in Italy, who embraced the project, and bought the raw materials. This move helped us cover the structural increases for 12 to 18 months.”
Producing close to home, the shipments are outbound and Cardinali has reduced the parceling of shipments. “We ship less and better.”
He underscored that the turnaround rests on “growing the quality of the product in a higher positioning, so that the reasonable increases in prices are part of the relaunch.” For example, he said he has ruled out all plastic zips. “And Marco is in sync with us; he has very high expectations, working with the likes of Fendi.”
The designer is a former winner of the Vogue Italia “Who Is on Next?” talent search, and has been working for years on accessories as a consultant for Fendi with Karl Lagerfeld and Silvia Venturini Fendi. While focusing his time on Etro, he will continue to consult with Fendi.
His eye for bold colors, labor-intensive clothes, optical effects, rich fabrics and sophisticated embellishments caught Cardinali’s eye, and his experience with accessories is expected to contribute to the category at Etro.
“Etro has all the characteristics of a lifestyle brand,” said Cardinali.
Womenswear represents 65 percent of sales but he touted the potential of menswear, which is growing steadily, and the home collection is seeing “a fabulous demand.”
Cardinali is currently discussing the licenses for the production and distribution of eyewear and perfumes, which were previously manufactured in-house.
To grow Etro, Cardinali is also relying on a key asset: “Our human capital — it’s moving to see how this project has been fully embraced.”