SIMINT RISING FROM RUBBLE
Byline: Sara Gay Forden
MODENA, Italy — “Everything that was done, from debatable strategic choices to questionable balance sheet practices, had reduced this company to a complete disaster,” admitted Maurizio Cacciatore, the new managing director of sportswear maker Simint SpA.
It’s Cacciatore’s job to rebuild the wreckage. The 38-year-old executive was brought on board in November to help revive Simint, after four years as central director for management control at Marzotto, where he worked closely with company chairman Pietro Marzotto.
“Within a year, this company is going to present itself with a whole new face,” Cacciatore said during an exclusive interview with WWD. He is already moving on most fronts: cutting costs, increasing efficiency, and improving deliveries.
He also revealed that Simint is in talks to sign on a new designer label jeans line next year, though he declined to reveal the name.
“One of our objectives is to enrich Simint’s stable of designer labels with names that reflect our strategy of selective distribution of a high-end name,” he said. “Armani is our example.”
Simint, which pioneered the A/X Armani Exchange business in the U.S. in 1991, started to flounder two years later and racked up staggering losses that went as high as 221.5 billion lire in 1993, when sales growth failed to keep up with an ambitious investment program.
Former Simint management resigned in late 1993 under accusations of mismanagement and balance sheet irregularities, and judicial investigations are in progress about certain of these business practices. And Giorgio Armani’s former partner in the company, Milan financier Francesco Micheli, pulled out in disgust, leaving Armani holding the bag. Armani rallied to Simint’s defense, investing billions of lire and dedicating his own executives to sorting out the mess at the sportswear maker. Part of the cleanup included selling Simint’s U.S. operation to Club 21, a company of the Singapore-based financier Ong Beng Seng. Simint’s former U.S. companies are in the process of being liquidated, while Club 21 has taken over the store network and the license to produce and distribute the A/X collection in the U.S.
An initial, valiant attempt to clean up the shambles was made by Simint chairman Giorgio Gabbiani, who initially divided his time between Simint and his duties as financial director at Giorgio Armani SpA. Thanks to Gabbiani’s efforts (in addition to the large-scale financial restructuring in which Armani has poured some $75 million in credits and fresh capital), Simint has already started its long walk back to the black.
In October, the company reported earnings for the first half year swung to a profit of $2 million (3.2 billion lire) from an 11.9 billion-lire loss a year earlier, a trend that is expected to continue for the full year. Now Cacciatore’s job is to give Simint the hands-on leadership it needs to continue its climb back to success, and his first priority has been to create a top-notch management team.
“I have looked for the best there is on the market,” said Cacciatore, who first hired 34-year-old Riccardo Adamo, formerly the commercial director of Stefanel SpA, as Simint’s new commercial director. “He’s one of the best,” said Cacciatore. His next move was to woo 42-year-old Livio Pigozzo away from Benetton to become director of operations. Finally, he brought 30-year-old Marco Zerbato, formerly controller for Marzotto’s Marlboro label, along as his own assistant.
“This company already had good key people, but there hadn’t been much management. They know the history of the company, but they needed the direction to move forward,” he said.
Today Simint, which employs some 240 people and is expecting sales for the year to reach $156 million (250 billion lire), does the lion’s share of its business with the Armani jeans and sportswear collections. The only exception is a small license for Bagutta, signed in July, for men’s and women’s jeans. The bulk of the business is taken up by the Armani Jeans collection for men, which represents some $75 million (120 billion lire) of sales. The line is a full sportswear collection of which the classic five-pocket jeans in denim and other fabrics represents about 40 percent of sales, Cacciatore said.
Armani’s women’s jeans collection does $50 million (80 billion lire) in sales, and Cacciatore has identified this line as key to the company’s future growth. “This is the line we really want to focus on,” Cacciatore said, noting that it still has room to expand.
“I went to see the collection with Armani just the other day — it is growing more and more complete,” he said. The Armani jeans are priced in line with other designer jeans, he said, ranging from $75 to $113 (120,000-180,000 lire) at retail. Some 25 percent of the Armani jeans collections is sold in Emporio Armani stores, while the rest is sold to multibrand stores. (In the U.S., Simint sells the Armani jeans line only to Emporio Armani stores, as the Ong group controls the rest of the business through its license with A/X Armani Jeans.)
Simint also produces the Armani Junior collection for ages 8-14. The company recently suspended production of the last two of its own labels, American System and Juciful by American System, which will lease with the spring/summer 1996 collections.
“It doesn’t enter into Simint’s mission to produce its own labels anymore,” Cacciatore said.
The outstanding portion of Simint’s business, and one that is consistently growing, is its cutting and sewing operation for elements of the Emporio Armani and Armani’s Borgonuovo line. “We have been doing this for about three seasons now, and we are growing stronger and stronger,” noted Cacciatore. He said the cutting and sewing contracts, along with Bagutta and the Armani Junior line, make up the remaining $31 million (50 billion lire) of Simint’s sales.
One of the things Cacciatore is focusing on is improving Simint’s record on deliveries, for which he has devised an early system of block orders. “For example, for fall/winter ’96-’97, buyers are invited to come and see the collection by the first half of December. At that time they order 50 percent of what they think they will need. Those clothes are then delivered between July and August. The rest is ordered between January and February, with deliveries in August and September, as is usual practice,” he said.
A similar schedule has been devised for the spring/summer season, with initial orders made in June, and early deliveries between November and December.
“This is also because the cruise collections are becoming more and more important and we need to give our clients the merchandise and the opportunity to do their windows,” he said.
Overall, Cacciatore was optimistic that Simint has what it takes to stage a turnaround. “This company has been through a profound, structural crisis, but it only needs a little bit of time to reacquire momentum and efficiency,” he said.