In Milan, Companies Jockey for a Sweet Deal
About 80 designers will show their ready-to-wear women’s collections for summer 2000 starting in Milan today, but the flood of mergers and acquisitions shaking up the business is likely to steal the show.
Italian companies are on the prowl for purchases to build up their stables of brands as the wave of consolidation sweeping other global business sectors also hits the fashion world.
“Italy has to create companies that are bigger and more powerful to face global competition--we’re seeing this happening in other sectors like autos and banks,” said Gianni Versace Chairman Santo Versace, who also chairs the industry designers’ group Camera della Moda.
“Deals like Prada’s purchase of Jil Sander are a stimulus [to consolidate], no doubt about it.”
Prada has snared both Sander of Germany and Britain’s classic shoemaker Church in an aggressive expansion drive.
It is rumored to be ready to pounce on Fendi, the family-owned Rome house famous for its coveted “baguette bag,” for which Gucci is said to have offered $700 million. Lips are sealed at both companies.
Gucci is also looking at a possible purchase of Yves Saint Laurent, owned by French retail group Pinault-Printemps-Redoute, and says it will make a decision when a due diligence inspection of the fashion house is completed in early October.
Gucci chairman Domenico De Sole told Reuters this month his group was looking for quality acquisitions to expand its multi-brand business but declined to say how it would spend its $3-billion war chest.
Giorgio Armani, for his part, is investing in strengthening his own business by boosting his accessories line with the creation of a new division announced on Thursday.
“Although our roots are in apparel, our clients are increasingly looking to us for a broad range of accessories,” the designer said in a statement that provided no figures.
Armani will also “pre-inaugurate” his huge new corporate headquarters, located in a custom-renovated factory in Milan’s canal district.
Versace said the merger frenzy was a natural response to the growth of the Italian fashion business.
The Milan fashion shows celebrate their 20th anniversary this year and are being feted by the city with a gala dinner at the 15th century Sforzesco Castle on Sept. 30. The shows run from today to Oct. 1.
Vittorio Giulini, chairman of the producers’ body Moda Industria, calls the upheaval in the business “total confusion.”
“The industry is changing, evolving into an interconnected chain of design, production and distribution,” he said.
“It’s a very uneven situation. Some companies are in free fall while others are doing well.”
Foreign demand for Italian clothing, which accounted for $30 billion in exports last year, has improved in recent months on the back of economic recovery in Far East Asia, he said. But domestic demand is still weak.
The latest figures from Moda Industria forecast a 2% increase in clothing production this year--an encouraging sign but still far below the 10% to 12% growth registered in recent years.
