MARZOTTA COUNTING ON FERRE IN BATTLE FOR SHARE IN THE U.S.
Byline: Samantha Conti
MILAN — Marzotto wants a bigger piece of the U.S. women’s apparel market, and its main weapon will be a double helping of Gianfranco Ferre.
Jean de Jaegher, Marzotto’s chief executive officer, said the Italian company is not only backing Ferre’s new bridge line for women and men, Gieffeffe, but is also throwing its weight behind the designer’s established bridge line, Studio 000.1, whose women’s segment was relaunched in the U.S. last year. Marzotto manufactures and distributes both lines under license.
Gieffeffe, which is aimed at the young bridge market, “is our new baby and we want it to be very visible. It will be competing with Calvin Klein’s CK, Donna Karan’s DKNY and Dolce & Gabbana’s D&G, but we are convinced there is a niche for a very sophisticated, Italian-oriented product with a good price/value relationship,” de Jaegher said during an interview at Marzotto’s offices here.
“Gieffeffe was conceived, created and ready for sale in one season. We realized there was a need in the market, and we acted quickly,” he added.
The Belgian de Jaegher, who took over the ceo post on Jan. 1, is a Marzotto veteran. He joined the Valdagno-based company in 1968 and has served as ceo of its Hugo Boss USA unit and as chairman of Marzotto USA.
Now it’s his job to guide the big apparel and textile company into the 21st century and help it through the storms of uncertain demand for apparel and a slowdown in parts of the textile market.
De Jaegher said his plans are to plow into North America and the Far East, which together represent only a little more than 20 percent of Marzotto’s Italian-based apparel sales. Most of this business is done in Europe and Italy in particular. In addition to its Italian-based business, Marzotto owns the German men’s wear producer Hugo Boss, which it acquired in 1991.
Marzotto’s earlier attempt to build a presence in the U.S. women’s market with Studio 000.1 faltered. The women’s segment of Studio 000.1, which debuted in 1988, was yanked from the U.S. market in 1993 and reintroduced there for the fall-winter 1995 season.
“Studio was too Italian-oriented and the fit was wrong for the U.S. We completely changed our approach, adapted the fit to the U.S. market and re-launched the line,” de Jaegher said.
So far, he said, it’s been doing well, but not well enough.
“That line is not at the level it should be. There will be a new approach, new attention paid to the to the definition of the target and to the collection itself. We also want to apply the same strategies as Gieffeffe: heavy promotion, shop-in-shops and freestanding stores.”
Marzotto is also talking to Ferre about altering the name of the Studio 000.1 line: making it less of a mouthful. The name refers to a computer-generated bar code signaling that a garment has passed inspection.
De Jaegher said he was expecting “double-digit” growth for the Studio line over the next three years — men’s and women’s combined — and that the first Studio store could open in the U.S. as early as 1998. He would not cite any sales projections.
Meanwhile, the first U.S. Gieffeffe store should open in the second half of 1997 in New York or Los Angeles. The first Gieffeffe store opened in Florence, Italy, in September, and a second opened subsequently in Tokyo. Ferre and Pietro Marzotto, the company chairman, told a news conference last year the plan was to open some 900 points of sale worldwide between 1996 and 1998 and to reach sales of $94 million.
A Gieffeffe jacket wholesales in the U.S. between $200 and $250, and the line on average is priced 10 to 15 percent below Studio.
Giving Gieffeffe a promotional push is also seen by others as a necessity if the line is to become an important player in the U.S. market.
Joan Kaner, senior vice president and fashion director at Neiman Marcus, noted, “Gieffeffe is not a household name and more promotion will certainly help us. Customers have to come into the store asking for it, rather than just finding it. Marzotto has to create a demand for the product.”
As for the Studio line, Kaner said: “As with any designer’s second line, when it’s good, it’s good. Designers can’t always expect to hit a home run; some seasons the line is only going to make first base. When the Studio line is good, it possesses the essence and the esthetic of Ferre — translated into clothing for the average woman.”
Paul Gordon, an analyst at IMI Sigeco, a big investment house here, also likes Marzotto’s apparel strategy. “It makes sense to focus on a few strong brands — and especially those that carry the Ferre name,” he said. The Ferre lines will be one of the driving forces behind Marzotto’s growth over the next few years, he said.
Gordon forecasts Marzotto in total will post 1996 sales of $1.48 billion (2.24 trillion lire) — a 5 percent drop from 1995, when the firm rang up sales of $1.56 billion (2.36 trillion lire) and earnings of $33.1 million (50.1 billion lire). But Gordon is predicting an 8 percent rise in sales for Marzotto in 1997 to $1.6 billion (2.42 trillion lire) and a further 9.5 percent rise in 1998 to $1.75 billion (2.65 trillion lire).
De Jaegher said the company would continue to push the other lines it markets in the U.S., Accento and Example by Missoni, but added that they would have a “lower rate” of growth compared with the Ferre lines.
The model for Marzotto’s apparel lines is the booming German men’s wear operation Hugo Boss, which the Italian company acquired in 1991. In 1993, Marzotto split Hugo Boss into three separate collections — Boss, Hugo and Baldessarini. In 1995, Boss had estimated sales of more than $660 million (1 trillion lire).
“What we created with the three separate lines is a lifestyle concept. The same person can wear all three collections in different circumstances,” de Jaegher said, adding that the company’s strategy is to keep the Hugo Boss lines as removed as possible from Marzotto’s other apparel lines.
“I think Hugo Boss is a good example of what can be achieved, and there is an exchange of information between the two companies. We want, however, to leave Hugo Boss with its own identity even if it’s competing head-on with the men’s component of Studio 000.1 by Ferre,” he said.
De Jaegher is also dedicating energy to increasing sales at Marzotto’s textile divisions, which account for about 36 percent of Marzotto’s Italian-based business (excluding Hugo Boss).
Marzotto has invested some $13.2 million (20 billion lire) in a new spinning facility for wool yarns in the southern Italian region of Calabria, and it has increased the capacity of its yarn-dyeing unit in a bid “to give faster and better service to our customers,” de Jaegher said.
He is also having to cope with a crash in the linen market.
A sharp drop in demand for linen fabric helped drag the company’s first-half sales down 8.3 percent to $727.1 million (1.1 trillion lire), while net income slid 27.5 percent to $9.8 million (14.8 billion lire).
“Linen will have a very significant, negative impact on the group’s global results this year,” de Jaegher said, adding that his only remedy has been to make the division more efficient and groom it for better times.
“When you are in a business that suffers dramatically in terms of volume, you have to work very hard to reduce your break-even level and limit your losses,” de Jaegher said.
“Our strategy has been to become more competitive in terms of cost reduction, to become leaner and to be ready for better times when they come — and they will come.”