Pal Zileri Men's Spring 2020

MILAN — Traditional Italian men’s wear brands have been trying to cope with the change in attitude toward classic tailoring, adapting to consumers’ need for easier and younger looks, and adding streetwear and sportswear elements to their collections.

But these efforts have been curbed by the COVID-19 pandemic and its effects. Working from home and the lack of formal events — including weddings, a cornerstone for Pal Zileri — has severely impacted the storied Italian men’s wear brand.

This week, Forall Confezioni SpA, which produces Pal Zileri, informed trade unions that it plans to cease the operations of its manufacturing plant in Quinto Vicentino, outside the Italian town of Vicenza. This means laying off 250 employees working at the plant, but the number can reach 400, including employees in offices and sales assistants in stores around the world.

Ceasing operations would allow Forall’s employees to be paid through the state’s extraordinary wage fund, or CIGS, and allow the brand to continue to exist, while the owner, Mayhoola, will try to find an industrial partner for the plant.

A source close to the company said that the Qatar-based fund has no intention of selling the brand.

Mayhoola first took a 65 percent stake in Forall in 2014. Two years later, the fund bought the remaining 35 percent of the firm from Arafa Holding, representing its commitment to expand the brand over the long term. Mayhoola also controls Valentino and Balmain.

“The decision to cease operations can no longer be postponed, unfortunately,” the source said. “The pandemic has severely deepened the worst crisis to ever hit the high-end formal men’s wear sector. The owner has invested in the brand for years and the company has leveraged all shock absorbers. CIGS would help the company buy time to try and sell the plant,” he explained, adding that the pandemic is the last straw in a crisis that has been going on for years and impacted the formalwear industry.

In a statement sent to WWD, the company estimated that demand could fall by a further 45 percent overall, and argued that the Quinto Vicentino plant “is now experiencing an almost two-thirds overcapacity and even the administrative structure is no longer sustainable from a scale point of view.” The company annually produced around 30,000 pieces.

According to a source, Pal Zileri’s sales in 2019 amounted to below 40 million euros. In 2020, they are expected to decline between 30 and 40 percent. The company said the decline in sales and earnings “caused considerable impairment for Forall, which was further worsened by the ever-increasing difficulty of obtaining financing from the banking sector. The shareholder’s support, seamless since 2014 and amounting to tens of millions of euros each year to finance the company’s cash and investments, is no longer enough to guarantee the continuity of production operations.”

The source added that the company did not expect a rebound in 2021 and that the brand was not really present in the Far East, which has been boosting business for most luxury brands.

For this reason, Forall believes “the only feasible solution to ensure an adequate period of protection for workers and, at the same time, guarantee a future for a part of the company, is the adoption of the so-called cessation of operations for the manufacturing branch.”

This procedure would allow Forall’s employees to be paid through the extraordinary wage fund for up to 12 months and they would also be included in regional active policies programs aimed at their reallocation into new jobs.

The company believes Pal Zileri through this procedure “could face a new era, by allowing the preservation of a few dozen jobs in non-manufacturing roles.” The Quinto Vicentino plant relies on “a unique know-how,” and the company has “already established contacts with major domestic and international brands [that] require further time to be implemented. However, it would not be possible without the adoption of said procedure.”

Sonia Paoloni, national secretary of trade union Filctem CGIL with responsibility for fashion, lamented the potential loss of 400 jobs caused by the closure of the Quinto Vicentino plant. “[Mayhoola’s] intention is to relaunch the brand by producing somewhere else, with a great loss for the territory here,” she said.

Paoloni underscored the strength of the brand, claiming Mayhoola had “not succeeded in relaunching it. The workers cannot pay for this. The owner has the money to further invest in Pal Zileri.”

The unions have announced a strike at the plant on Dec. 15 and asked for a meeting with the Minister of Economic Development.

“Pal Zileri is also a historical brand, as is Corneliani,” said Paoloni, who was hopeful that the Italian State would consider helping Forall the same way it had supported Corneliani earlier this year. As reported, the latter in June submitted an application for admission to a composition with creditors procedure and a month later it received an investment from the Italian State.

Italy’s Ministry for Economic Development agreed to invest 10 million euros in the Mantua-based tailoring company over the two following months in order to safeguard Corneliani’s continuing operations.

The state intervention falls under the new “Re-Launch” Decree, developed by the Italian government to support the restart of the country after the global pandemic and which includes the creation of a fund to support companies during the crisis.

Founded in 1970 in Quinto Vicentino, in the Eighties Forall collaborated with Luciano Soprani, Verri, Antonio Fusco, Krizia, Trussardi and Moschino to produce and distribute their men’s lines. The company went on to expand in the Nineties and developed Pal Zileri into a classic, highly crafted brand that employs top fabrics ranging from cashmere and guanaco to vicuna and is available in more than 70 countries.

Pal Zileri has seen its share of changes at both the creative and management level over the past years.

Last year, Rocco Iannone exited the label, leaving his role of creative director after two years. A successor was not named.

Iannone succeeded Mauro Ravizza Krieger, who left after a three-year tenure.

In July 2018, Pal Zileri ushered in a new chief executive officer, Marco Sanavia, to succeed Giovanni Mannucci, who in turn had succeeded Paolo Roviera.