Expectations Run High Ahead of Milan Fashion Week
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MILAN — In the words of Renzo Rosso, founder of OTB, “There’s such a strong desire to go out, meet people and touch the products.” This is the underlying mood as Milan Fashion Week kicks off Wednesday following a successful edition of the furniture and design trade show Salone del Mobile earlier this month. “People over the past year have become more digital and found new ways to be modern, it’s a potential that we can all put to good use to restart,” Rosso said.
Indeed, the number of physical shows and events, accounting for 125 of the 173 appointments scheduled for Milan Fashion Week, is a reflection of a country that is returning to life.
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After being badly hit by the COVID-19 pandemic last year, Italy has accelerated its vaccination campaign, with almost 75 percent of the population over age 12 fully vaccinated — earning the praise of top American immunologist Dr. Anthony Fauci — and the country is making it mandatory for all workers to have a “Green Pass,” which provides proof of vaccination, a negative test or recovery from the virus.
The measure, which is due to take effect on Oct. 15, is a first for Europe and one of the strictest in the world. But even before then, all physical events at MFW will be accessible only on showing the pass, which is already required for citizens to enter schools, bars, restaurants, cinemas and other indoor venues.
Meanwhile, Italian luxury brands have shown resilience, posting a business recovery in the first half and at times reaching or surpassing pre-COVID-19 levels.
Projections for sales generated by the fashion industry and categories such as jewelry, beauty and eyewear combined estimate 20.9 percent growth to 83.1 billion euros in 2021 compared to the 68.8 billion euros in 2020, according to Italy’s Camera della Moda. This is still below the 90.2 billion euros generated in 2019, but Carlo Capasa, president of the association, is eyeing the Christmas holiday season to help recover the sales lost in 2020.
“We wouldn’t make up for all the losses but we aim to recover the rest in 2022, if not even grow next year. I think there’s great attention on Italian fashion right now, and data on our export performance confirm this,” said Capasa, presenting the official show calendar earlier this month.
Exports are expected to increase 24.5 percent to almost 70 billion euros by the end of 2021 compared to the previous year. In the first five months of the year, exports of Italian fashion goods grew 27.6 percent.
Italy has also seen brisk M&A activity, and some of the shows will be the first to be presented under brands’ new ownership, ranging from Etro, which was acquired by L Catterton in July and which will see the arrival of new chief executive officer Fabrizio Cardinali by the end of the year, to Jil Sander, which has been controlled by OTB since March.
Rosso did not conceal his excitement to attend the spring Jil Sander show, scheduled for Wednesday. “I can’t wait; [creative directors Lucie and Luke Meier] have worked hard but I haven’t seen the collection, I want to fully enjoy it in the moment,” the entrepreneur said.
He enthused about the designers and the relationship he’s already forged with them. “We speak the same language,” Rosso said. “The class of Jil Sander products is amazing, they are iconic and I see that high-end goods resonate more and more with customers.”
Rosso has been busy setting up a managerial structure at Jil Sander, naming OTB CEO Ubaldo Minelli as also CEO of the brand, as reported, rationalizing the organization and developing its technology. OTB is also investing in real estate. “I bought the walls of the Milan store, which will go through a very important restyling next year. This is an Italian brand and Milan is key,” said Rosso, who is also channeling funds into China and the U.S., planning to open a Jil Sander store in Manhattan’s SoHo shortly, followed by a unit in Shanghai.
He also highlighted the strength of the Marni and MM6 Maison Margiela brands, both under the OTB umbrella, showing in Milan. Asked if he is eyeing other labels at the moment, Rosso said he “always keeps a door open,” but an acquisition gets the green light “only if it makes sense, not just for the sake of it.” At the same time, he did not deny that he is looking at buying firms in the manufacturing pipeline, which includes “companies that guarantee Italy’s beautiful products and craftsmanship.”
Responding to a question about the Green Pass, Rosso said he is “fully in favor,” as he has been for a long time, applauding Prime Minister Mario Draghi for supporting it, “allowing people, families, companies, the economy to be safer. Italy will greatly benefit from this measure and become more and more an inspirational country.”
“Vaccines give us an enormous sense of security,” concurred Brunello Cucinelli, who was also one of the first to speak up about the need to regulate working conditions. “You can’t expect everyone to be of the same mind, but the government will now allow us to work without fear.”
He agreed that there is a “more than positive mood,” based on the success of the company’s summer collections ordered by multibrand retailers. “Despite the restrictions, there is a strong desire to dress well.” Italy and his company can encourage this, he claimed. “We not only manufacture products, we are also producers of good taste.”
His strategies are reflected in the performance of his namesake company, which in the first six months of the year reported revenues totaling 313.8 million euros, up 7.7 percent compared to the end of June 2019. This was a 52.9 percent gain compared to 205.1 million euros at the end of June last year. In the second quarter, the company saw a 13.8 percent increase in sales compared with 149.2 million euros in the same period of 2019.
Cucinelli sees this as a year of “rebalancing,” forecasting a further acceleration in the second half, and expecting a 20 percent increase in revenues in 2021 overall compared to 2020 and a 10 percent gain in 2022 compared with 2021.
Guido Gambardella
Michele Norsa, executive vice chairman of Salvatore Ferragamo, who was granted all powers of ordinary administration at the company until the arrival of Marco Gobbetti as CEO next year, said he sees “really strong signs of recovery for several brands and a lot of enthusiasm,” which is also mirrored in the number of IRL shows in Milan. “There are the first signals of almost a return to normality” with a strong representation of Italian and European press and clients expected at Milan Fashion Week. Unfortunately, travel bans are still preventing most buyers and editors from Asia and Russia to enter Italy, he noted.
Ferragamo’s previous CEO, Micaela le Divelec Lemmi, exited the company on Sept. 8, steering it back into the black and reporting revenues that in the first six months of the year climbed 44.2 percent to 524 million euros, compared with the same period last year. Sales in the second quarter of 2021 rose 91.3 percent.
China contributed to the solid performance of the company, with sales that were 30 percent at full price compared with 2019 in the first six months of the year.
China will remain key for the industry, Norsa believes, saying that “the West misunderstood some of China’s President Xi Jinping’s comments” on the redistribution of wealth. “The current leadership is aiming to see a growth of the middle class and of reasonable wealth compared to excessive wealth obtained too fast, encouraging luxury spending.”
The U.S. has also been a fundamental business driver for most Italian luxury brands, as well as for Ferragamo. “The revenge shopping seen in China is also a reality in the U.S.,” said Norsa, citing a lot of liquidity on the market, also supported by President Joe Biden’s injection of rescue funds. He noted brisk growth across the country and on the East Coast, compared to earlier gains in single states such as Florida, California and Texas.
“There are good prospects for the future,” he said. “Italy is more and more central for the creation and production of luxury goods, and the country’s knowhow is increasingly more recognized. This will benefit our brands and it is our duty to take advantage of this privilege,” Norsa said.
September will mark a first also for Missoni, as the Italian brand will show the first collection designed by ad interim creative director Alberto Caliri, following Angela Missoni’s decision to take a step back from the role she has held for the past 24 years, while maintaining her title as president of the company. Caliri has been her right hand for the past 12 years. “The evolution of the brand is done in continuity, without a rupture with the past,” said CEO Livio Proli, who joined the company in May 2020.
Proli has presented a five-year plan shared by the Missoni family and FSI, the Italian fund that took a 41.2 percent stake in the company in 2018. “The fund is very respectful. It’s not aggressive, of course; it invests aiming to exit with a profit, but the partners have the right sensibility to revamp the brand while protecting it, expanding it globally. They are men of finance but they understand the typical dynamics of fashion and that longevity is key and that takes time,” he said.
As per the plan, entering China and further building the American market are among the main priorities. After opening a branch in Shanghai earlier this year, the first flagship in China will open in that city in November with a new store concept. The brand will also launch its online store in China next month. Missoni is planning eight openings in China between 2022 and 2024.
“America has shown a quick restart,” said Proli, confident in the brand awareness in that market. In addition to an active online presence, Missoni will open two new stores in two years there.
Globally, there are 20 Missoni stores and the plan is to reach 46 units by 2025.
“The company has overcome the year of emergency well,” said Proli, noting that Missoni has seen a strong performance of evening and beach wear as well as of the Home line.
Courtesy of Missoni
“Undoubtedly, this is a good moment for Italy, but we Italians are always the last ones to understand it. We need someone else to tell us that we are living in the most beautiful country in the world,” deadpanned Toni Scervino, CEO of the Ermanno Scervino label.
The company expects to close 2021 with sales up 40 percent compared with 2020 and all markets returning to pre-COVID-19 levels starting from 2022, the executive said. He cited “encouraging signs, which prove that we are in the right direction.” Scervino believes the “work done during the past year, taking refuge in creativity, which eased the fear,” allowed the company to produce successful collections. “We have never had so many orders and requests to open stores,” he said.
In fact, the company is expanding its distribution, opening six new stores in Europe, three in China, two in South Korea, one in Japan and one in Russia, bringing the total to 68.
“In the first half of 2021, we opened two new boutiques, in Dalian and Wuhan and a third will open in Nanjing, reaching 12 boutiques opened in China in four years. We will open three new boutiques in 2022 and five additional units the following year to reach 20 by 2023,” Scervino said.
China is a market where the brand is seeing rapid growth, with retail sales in the region up 14 percent last year compared with 2019. “We expect to close 2021 up 47 percent compared with 2020,” Scervino said.
Europe continues to be the company’s core market, representing 55 percent of sales, although over the past year Russia and China were the best performing regions, accounting for 23 and 14 percent of sales, respectively.
In 2021, the company opened stores in Europe in tourist and exclusive locations, as in Rome near the Spanish Steps, in Mykonos and Saint Tropez. Coming up next are Gstaad and Vienna and a unit is planned by the end of the year in Courchevel.
Online sales account for 9 percent of the direct retail channel and by the end of the year they are expected to represent between 13 and 15 percent. The U.S. is Scervino’s second most important e-commerce market after Italy. In the first half, sales grew 22 percent in the U.S. compared with the first half of 2019. “Given the growth of the wholesale channel and the success of our boutique in Miami, which has never seen a slowdown, we are carefully looking at other openings in the U.S.,” Scervino said.
The reason for the success is simple, in his opinion: “I have always believed in creativity, quality and Made in Italy production, which prompt the desire to buy. Quality is what is truly sustainable, something that lasts in time not simply worn and thrown away.”
Scervino will hold a show on Sept. 25, inviting only press, and setting up appointments with buyers. “We must continue to be cautious,” he said, fully approving the enforcement of the Green Pass. “I understand there can be some hesitancy or resistance, but it’s the least of the evils compared to the illness and the variants,” he said.
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