UNGARO’S NEW DESIGN: DOUBLE RETAIL VOLUME WITH BOLD 5-YEAR PLAN
Byline: Miles Socha
PARIS — Emanuel Ungaro is ready to roll.
Having spent the last few years quietly renovating the image of his house and expanding and tweaking his product range, he’s about to show the world what he’s been up to.
Salvatore Ferragamo, the Italian accessories and ready-to-wear firm that acquired Ungaro in 1996, plans to make a major investment in the house and bring it into line with the direct-control strategy being pursued by other European fashion groups. Highlights of a new five-year plan include:
Vastly expanding the network of Emanuel Ungaro stores, adding at least five locations in 2001.
Introducing accessories-only boutiques, starting with a location on Paris’s Left Bank next summer.
Extending the brand into lingerie, jewelry, watches and high-end men’s wear.
Beefing up executive ranks.
Relaunching the Emanuel/Emanuel Ungaro line in the U.S. with a new partner.
Doubling the budget for image-building efforts, including fashion shows, advertising and events.
In an exclusive interview with WWD, Ungaro and Leonardo Ferragamo, Ferragamo’s chief executive officer for group strategy and diversified activities, outlined their ambitious new strategy for the 35-year-old fashion house, one designed to double the retail volume for the brand to some $275 million (2 billion francs) over the next four years. Market sources said Ungaro is poised to invest between $35 million and $50 million in the Ungaro house over the next five years to accomplish its goals.
Ferragamo, a soft-spoken executive with a keen interest in sailing, could barely contain his enthusiasm for what he described as a new spirit infecting the French house, which embarked on a more youthful, trendy trajectory in recent years.
“We were all astonished. There is such a strong heart in here, full of passion, creativity and energy that you don’t find in other companies,” he said, seated in Ungaro’s atelier, which was strewn with bolts of brightly colored cloth, errant pins and couture toiles on bust forms. “We’ve got to bring it out and say it loud to the world what Ungaro is about.” The formula Ferragamo outlined for Ungaro echoes the approach of major European luxury groups like LVMH Moet Hennessy Louis Vuitton and Gucci Group: reduce dependency on licensing, tighten control on manufacturing and distribution and leverage the high-margin, high-demand accessories category.
“The enormous groups with which we are competing — I don’t think I have to mention any names — we have to be at the same level,” Ungaro said.
Ferragamo said the goal is to work in a more “integrated way” with its key suppliers and licensing partners. At present, Vestimenta makes the Emanuel Ungaro top rtw line and Ungaro handles the distribution. Ferragamo manufactures and distributes handbags, leather goods and footwear. Meanwhile, current licensees include Staff International for the Ungaro diffusion line, currently distributed only in Europe, Swinger International SpA for the Fever casual sportswear line and Luxottica for eyewear.
With these arrangements in place, “now we are ready to expand in terms of our visibility. Emanuel Ungaro needs to be brought to the eyes of the world in the best possible way and in a directly controlled manner,” Ferragamo said.
He called wholly-owned stores the “most efficient way to project the image of the company in a global way.”
Ungaro’s retail presence has been in flux in recent years. In 1998, Ungaro had 13 doors worldwide. Today there are only five wholly owned Emanuel Ungaro boutiques, in New York, Paris, Milan and Bal Harbor and Palm Beach, Fla.
Ferragamo’s five-year plan calls for expanding to a total of 35 locations. Ultimately, the firm should end up in a position where it controls more than 50 percent of revenues through directly owned retail, he said.
On tap for this year are a greatly enlarged flagship in New York at Madison Avenue and 67th Street. Slated for a March debut, the store will triple in size to almost 5,000 square feet and be a world showcase for the world of Emanuel Ungaro. Also making their debuts early next year will be a London flagship on Bond Street, two stores in Japan and a Rome location. Existing Ungaro boutiques in Milan, Bal Harbor and Palm Beach are slated for renovation and/or expansion projects. Priorities for new U.S. locations in 2002 include Chicago, Dallas, San Francisco and Beverly Hills, Calif. In Europe, possibilities include Cannes and other resort locations and important capitals.
All the new locations will emulate the 3,800-square-foot Avenue Montaigne location in Paris, which was last updated in 1999 by the Italian architect Antonio Citterio. The Avenue Montaigne location exceeded its sales plan by about 20 percent in 2000, according to Ferragamo. It pulls in an estimated $5 million a year.
The first accessories and footwear store, to bow at 33 Rue de Grenelle here this summer, will be the first of three such new concepts. Others are slated to bow in London and New York within the next 18 months.
Ferragamo said Ungaro accessories currently generate wholesale volume of about $12 million, reflecting a still-limited distribution. “They need to be seen,” he said. “They’re so avant-garde and so forward-looking and full of sensuality. That needs a special focus.” Ferragamo acknowledged that Ungaro has taken a slow-growth approach in the accessories area, testing the market and refining the products. But based on strong response to such styles as the Pigalle handbag, a structured style with a change-purse-style closure, the accessories business should grow to $25 million at wholesale in 2002.
Ferragamo noted that direct retail would be complemented by select distribution to specialty stores. In recent years, Ungaro has added a new crop of specialty customers, including the likes of Jeffrey in New York. Ungaro also has long-standing relationships with many major U.S. retailers, including Neiman Marcus, Bergdorf Goodman and Bloomingdale’s.
Ungaro and Ferragamo credit the young design team headed by creative director Giambattista Valli, who joined the house in 1997 and was named creative director in 1998, for energizing the accessories category and fortifying rtw. Ungaro noted with pride that, himself excepted, every member of the design team is under 35 years of age. Indeed, Valli was not yet born when Ungaro founded his couture house on Rue McMahon in 1965. To execute the new five-year plan, Ferragamo has already bolstered the executive team at Ungaro. New appointments include Luca Belenghi, executive director; Averyl Oates, retail director, and Francesco Gestri, financial director. Within a few weeks, the company expects to name a commercial director and managing director. Ungaro continues as chairman.
Meanwhile, Ferragamo confirmed that the company plans to reintroduce the Emanuel/Emanuel Ungaro brand in the U.S. sometime this year.
As reported, the bridge sportswear business, relaunched in September 1999 by former GFT USA executives Maura de Visscher and Kimberly Perrone, shut down last November and the business was liquidated. Perrone and de Visscher had previously directed the licensed Emanuel business at GFT USA Corp., which had grown into a $160 million business in the mid-Nineties but quickly unraveled when the bridge market soured. Ferragamo declined to provide many details about a new Emanuel plan, but said, “We’re looking at the possibility of another licensing agreement. No plan has been defined as of yet. But Emanuel has a magnificent potential in America. It’s a great opportunity for a new partner to work more closely with us in recreating this success.”
In the meantime, Ungaro executives plan to put their efforts behind accessories and the three key rtw lines, which generated about $25 million at wholesale last year. Thanks to a bumped-up marketing budget, expect fashion shows to be even more grand, store opening events more glitzy and a pumped-up advertising presence. The company plans to spend about $12 million on advertising this year, up from about $8 million last year.
In fact, Valli and his creative team shot three campaigns for spring, each with a different photographer: Mario Sorrenti for the top line; Solve Sundsbo for Ungaro, and Matt Atlas and Marcus Piggott for Fever. The media buy will be intensified in New York and London to coincide with the retail openings.
There’s even a television commercial in the works to coincide with the Valentine’s Day launch of Desnuda, the house’s newest fragrance. Last November, at a launch party for the perfume in the Moroccan desert, Ungaro used three words to describe the scent: “seduction, seduction, seduction.”
During the interview with Ferragamo, Ungaro couldn’t help himself from falling into another triple wordplay, describing the situation at the house with the words: “energy, energy, energy.”
“We are very ambitious,” he said, referring to the five-year plan. “We are not megalomaniacs. But we believe in the quality of our relationship with the Ferragamos. And we deserve to be very successful.”