Italian Diesel Jeans Billionaire Looks to Stitch Together Fashion Front
(Bloomberg) -- The billionaire founder of Diesel jeans is on a mission to convince Italy’s many small fashion players that their survival depends on working together.
Some small companies “won’t be able to sustain the costs of digital development, won’t get a deal with big online platforms,” Renzo Rosso, Diesel SpA’s 65-year-old founder, said in an interview. “Some fashion companies will need to accept partnerships, and these alliances will give them the visibility they never had before.”
Rosso was recently appointed as a delegate of business lobby Confindustria with a mandate to shore up the Made in Italy brand, the backbone of the country’s luxury industry. The challenge will be to convince Italy’s maverick fashion entrepreneurs to work together and create a more united front.
Though it boasts an impressive array of famous brands, Italy lacks a national luxury-sector champion, unlike France, which has dominant companies like LVMH Moet Hennessy Louis Vuitton SE and Kering SA.
That’s led to iconic brands being snapped up by foreign players, including Micheal Kors buying designer Gianni Versace in 2018.
Deals involving remaining independents like Giorgio Armani SpA and Salvatore Ferragamo SpA have been rumored for years, though Rosso says he’s optimistic that steps taken now could help keep some of these companies in Italian hands.
The French model could be helpful, where “entrepreneurs act together, the government is involved,” Rosso said. In the past, the Italian industry “was a disaster, people were unfriendly to each other.”
Now there’s a cordial atmosphere, he said. “Ermenegildo Zegna, Moncler’s Remo Ruffini, Patrizio Bertelli and Luigi Maramotti and myself make strategic decisions together.”
Bertelli is Prada SpA’s co-founder and Maramotti is Max Mara’s chairman.
Prime Minister Mario Draghi’s government may also be more open than past administrations to providing support to the industry. Economic Development Minister Giancarlo Giorgetti has said Rome could extend so-called Golden Power protection -- state measures to block or manage foreign ownership of strategic businesses -- to the automotive and steel sectors, fueling speculation that branded goods companies could be next.
LVMH last month raised its stake in Tod’s SpA to 10%, sparking talk that the troubled Italian shoemaker may become a takeover target. The French fashion house already owns the Bulgari and Fendi labels.
Armani founder Giorgio Armani isn’t ruling out a deal for his company, though he wants to keep it in Italy. Continuing as an independent company is “not so strictly necessary,” Armani told Vogue magazine in March. “One could think of a liaison with an important Italian company,” he said.
Armani may be seeing things the same way Rosso does. In the Diesel founder’s view, grouping Italian branded goods businesses together makes them more competitive and will be essential to their technological growth and ability to develop sustainable products.
“Consumers increasingly want sustainable products,” Rosso said. “Business partnerships, mergers can help. A lot of tiny companies won’t be able to afford that transition.”
Building digital platforms will also be costly. Luca Solca, senior luxury goods analyst at Bernstein Research, said in a recent report that a lack of scale compared with international rivals has left Italian companies far behind in the digital transformation.
Rosso’s Only the Brave holding company, or OTB, has already acquired a collection of fashion brands -- including Maison Margiela, Viktor&Rolf, Marni and Jil Sander -- and Rosso isn’t ruling out buying more brands. “We won’t say no if something interesting comes along,” he said.
OTB, which had sales of over 1.3 billion euros ($1.6 billion) last year, could also eventually seek a stock-market listing, Rosso said, repeating comments he’s made previously.
“The group is growing, solid and very dynamic, thanks to the fact it’s private,” the founder said. Still, “it would be easier to manage a listed company. Right now I am very involved. I have a big family, it’s much better to have a transparent company, with managers -- though with the family still in control.”
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