MILAN — Italy’s fashion industry is nothing if not forward looking.

With the country’s economy reeling and its government collapsing, bankers, executives and entrepreneurs gathered in the headquarters of Milan’s stock exchange for the annual summit organized by Pambianco consultancy, this year titled “Fashion and Luxury: The Size Challenge.”

According to Gregorio De Felice, chief economist of Intesa Sanpaolo, one of Italy’s main banks, Italian fashion industry sales grew 7.2 percent in the January-August period, led by exports. De Felice said sales increased in all the main markets, like France, Germany and the U.S.

Exports to Russia also picked up as well as Asia — especially Hong Kong and China. However, the economist said there was a very real possibility of a European recession in 2012 — “although not as bad as in 2009.”


He also warned that in the last months of 2011 and in the next two years the business climate for Italian fashion firms will worsen as the global economy slows and as austerity measures in Italy impact consumer spending.

Mario Boselli, president of Camera Nazionale della Moda Italiana, said the trade group sees Italian fashion industry sales growing by about 4 percent in 2011, nearly half of Camera Moda’s previous estimates for growth of around 7 to 8 percent. “There are vague fears that 2012 could be another 2009, when industry sales dropped 15 percent,” Boselli said, “but we don’t see this happening because many things have changed and lessons have been learned. However, 2012 will be a long year.”

During the summit, executives discussed the advantages and disadvantages of three main growth paths: listing on the stock market, bringing in private equity funds or going it alone. Michele Norsa of Ferragamo SpA, which listed in June, said that a key reason behind the family’s decision to list the company was to make a “qualitative jump” and not just to raise capital for growth. He said, “If everything goes well, the visibility you acquire is extraordinary.”

Listing raises the bar in many ways. “Being public is a constant challenge,” Norsa said, adding that there is a risk of disappointing investors. “If you increase your profitability by 1 percent, then next year analysts expect you to raise it more. If you open 29 stores instead of 30, then the market reacts.”


Commenting on the market situation three months after the firm’s initial public offering, Norsa said that despite recent economic turmoil, Ferragamo “continues to have a positive outlook for the sector.” The executive also said that in order for a firm to be able to compete on the global market, it must have scale. And while mergers may be a way to greater scale, they don’t always work or generate the expected synergies. “Cultivating your brand and focusing on emerging markets is important,” Norsa said. Also, “it’s important to be fair with the market, from the roadshow on,” he added, “it’s one of the most important aspects [of listing] and it helps to grow a company’s value over time.”

Brunello Cucinelli, who despite recent market volatility is still planning to take his company public next spring, said that he is motivated by a desire “to be more international, to recruit excellent managers, also from other countries, and to ensure [the firm’s] longevity.” Listing is a way to strengthen the firm. He said he wants investors for the long haul.


Commenting on whether he felt that Italy needed large luxury conglomerates like France’s LVMH Moët Hennessy Louis Vuitton, Cucinelli said: “I like the Italian system very much. We are excellent artisans and creative. Many French companies come and produce in Italy. What worries me is not so much who will purchase our products in 10 or 20 years, but who will be the skilled workers who will make them. It is necessary to bring back moral and economic dignity to manual work.”

Marco Palmieri, chief executive officer of Milan-listed travel accessories maker Piquadro SpA, said that to go public a company must have “a solid story to tell.” Palmieri said that listing has the advantage of bringing greater transparency and that regular discussions with analysts “can generate useful insights.” Going it alone is increasingly hard, especially for small companies, the reasoning goes, as success nowadays requires lots of capital. “Until recently we [in Italy] were not a very capital intensive industry; we made up the gap with our creativity.”

However he pointed out that today distribution costs alone require access to abundant capital.

Andrea Guerra, ceo of Italian eyewear maker Luxottica SpA, said that one thing entrepreneurs thinking about listing need to do is consider “what they want to do with their company. Being listed means you are scrutinized every day.” He added that successful Italian fashion companies have five characteristics in common: they are very focused, they always look at the world as their market, they aspire to be large, they are very attentive to their customers and they recruit outside managers.

The need for international scope is an element all the participants agreed upon and much remains to be done, especially in terms of distribution networks. Guerra said Luxottica has 300 stores in China, which may seem like many, “but it’s like having one store in all of Italy.” Travel retail is also an important channel to develop, he said.

Asked by the panel moderator what advice he would give to entrepreneurs thinking of listing, Guerra replied: “Open up the company. It can be done in many ways, widening the board, creating an advisory board, opening the company in financial and management terms. Opening the company up today is crucial.”


For firms who need to grow but are unwilling to go public, private equity is another option — but only in those cases where there is a clearly defined set of objectives. “We help companies with a plan we believe in,” said Andrea Ottaviani of L Capital, the private equity fund of LVMH Moët Hennessy Louis Vuitton. “Private equity is a system for sustaining growth, it’s an alternative to bank funding and precedes a stock market listing.”

While the stock market may not be for everybody, it may be an option for more companies than is generally believed. Italy, which has 17 listed fashion companies, according to David Pambianco, of the Pambianco consultancy, is ripe with IPO candidates. In a booklet distributed during the summit, Pambianco identified 50 firms which have the right characteristics for a stock market listing. Using criteria like revenues and sales and profitability growth, Pambianco generated a point system to determine the most likely candidates.


Leading the pack is Dolce & Gabbana, followed by Giorgio Armani, Calzedonia/Intimissimi, Only the Brave (Diesel) and — rounding out the top five potentially best-suited candidates — Ermenegildo Zegna. The list includes other well-known Italian brands, like Brunello Cucinelli, Max Mara, Roberto Cavalli, Liu Jo, Gruppo Coin and Missoni.

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