MILAN — Etro is preparing to take its paisleys and prints into a broader universe.
The company is focused on retail expansion, the growth of markets outside Italy — especially the U.S. — and product diversification. A more complete handbags and accessories collection is being introduced, as are Etro lounges, built around the company’s home line.
Etro’s ready-to-wear has fueled sales in the U.S. over the past two years, a market that currently accounts for 15 percent of sales, up from 7 percent in 2002. “We’ve registered double-digit growth in the U.S. every season, and expect that market to account for 20 percent of sales at the end of the year,” said Fabio Gnocchi, sales manager of the family-owned company, in an interview at Etro’s headquarters here.
The company’s sales in 2002 were $197.3 million, or 165 million euros converted at current exchange, and Gnocchi said he expects 5 percent growth for 2003. Last year, rtw accounted for 70 percent of sales, of which 60 percent derived from the women’s division; the textile division accounted for 13 percent of sales. All products are manufactured by a network of selected subcontractors.
Etro will open a flagship store on Rodeo Drive in Beverly Hills in July, and the company is in talks to open a store at the South Coast Plaza mall in Los Angeles, and one in Las Vegas. Currently, there are boutiques in New York and Miami. In the U.S., the line is also carried by 110 specialty and department stores, including Bergdorf Goodman, Neiman Marcus, Barney’s and Saks Fifth Avenue.
Robert Burke, vice president and senior fashion director at Bergdorf’s, said the store has seen “a significant growth” over the past few seasons with Etro, and he attributed the brand’s success to “key silhouettes, updated classics with a modern twist” and its quintessential color palettes, patterns and embellishments.
Shirts, tops and jersey items are among the line’s bestsellers, according to Burke, who said Veronica Etro, the youngest of the four Etro children, who started designing the line solo in 2000, has “given new life to the brand, which is a self-expression of her style.”
The company, founded in 1968 by Gimmo Etro, president, who still supervises all operations, is managed by the second generation: Veronica’s siblings Kean, Ippolito and Jacopo are in charge of men’s wear; finance, and the home, textile and accessories divisions, respectively.
The expansion of the accessories division, and handbags in particular, is one of the company’s priorities. “Now that a member of the family has taken this sector under his wing, people will see the difference,” said Gnocchi, referring to the fact that Jacopo Etro started overseeing accessories a year ago.
Accessories currently account for 17 percent of sales. The goal is for the division to account for 30 percent of sales by the end of 2004. “We are developing handbags on two fronts: On the one hand, we are renovating our core paisley bags with fun details, such as colorful piping, or more risqué combinations of materials; at the same time, we are reelaborating traditional themes, such as polo and horseback riding, which will mark each season,” said Jacopo Etro. “But no vintage — ever. We want to offer the unexpected.”
The Whip bag, so-called for its whip-shaped shoulder strap, will be the company’s main offering for fall/winter 2004.
Gnocchi said it’s important for a company to have a solid accessories business, as these “are not as affected [as rtw] by the changes and trends in fashion and the economy,” and because accessories help build a brand’s identity. Gnocchi recalled how accessories were the first step the company took into product diversification 21 years ago, when it decided to grow from a textile manufacturer. “At the time, those paisley bags coated in PVC were more consequential than ready-to-wear for us,” said Gnocchi.
In addition, Gnocchi said handbags help target “huge markets such as the Far East—a land of opportunities.” The Far East currently accounts for 25 percent of Etro’s sales.
In Japan, where the company plans to open two more stores in Tokyo next year, Etro is working on taking control of its joint venture with its historical partners Mitsui and Sanyo, which own a 51 percent share of Etro Japan. “We want to consolidate our business in Japan, where local business is growing as the Japanese travel less,” said Gnocchi. There are 30 Etro shop-in-shops in Japan and a boutique in Tokyo’s Ginza district.
The upcoming store openings in the U.S. and Japan are part of a retail expansion around the world. There currently are 110 Etro stores and 700 multibrand accounts in the world. Last year, Etro opened stores in Madrid, Munich, Venice and a bespoke space on Via Montenapoleone in Milan. The previous year, Etro opened a store in Moscow. “We are very pleased with the performance of that store, which made $6 million in retail sales in one year,” said Gnocchi.
In July, Etro will open a store in India, in Bombay’s new Villa Moda luxury emporium. Villa Moda’s owner, Sheikh Majed Al-Sabah, has also asked Etro to design an Etro Lounge, featuring the company’s home collection, within a new lifestyle and entertainment center expected to open in Kuwait in the first quarter of 2005, followed by one in Qatar. “The lounge would make use of the company’s heritage and history,” said Al-Sabah in a phone interview. “The Etros will have their say on everything from uniforms to tables and china,” said Al-Sabah, who brought Etro to Kuwait’s Villa Moda two years ago.
Gnocchi said the Kuwaiti lounge could be a prototype for others. While there are still no details or renderings, Gnocchi said it will be a “compromise between modern and traditional lines, an exclusive chill-out space, with rich fabrics inspired by the Middle East. It’s less of a commercial venture, and more an image and marketing initiative.”