Ailing Italian fashion house Gianfranco Ferré may have just found its saviour. After going bankrupt in February 2009 its administrators have been struggling to find a suitable buyer. But the presence of a Korean American private equity boss at last Friday’s catwalk show at Milan Fashion Week suggests the search may be over.
Douglas Song, the managing director of Prodos Capital Management LLC, has joined forces with Samsung to put together a bid that looks like it will be successful. As Gianfranco Ferré is a national icon, the deal needs to be signed off by Prime Minister Silvio Berlusconi, which is expected to happen in the coming days.
Gianfranco Ferré once stood proud next to Italy’s powerhouse labels such as Versace and Armani. But following the founder’s death in 2007, it has struggled to regain its identity.
Samsung, whose women’s fashion line is said to make over €2bn in sales, hopes to guarantee Gianfranco Ferré’s future infrastructure, ranging from logistics to supply-chain management, although production will remain in Italy. The South Korean conglomerate previously flirted miserably with the purchase of now-bankrupt womenswear label, Derercuny. Its latest shopping spree is a second attempt to pit itself as a major global player.
Andrea Ciccoli, one of the three administrators arranging the sale, says, “Samsung’s large textile operation means it would make sense. It’s also a good way for them to get into the high-end segment of the market where they aren’t currently present.” The sale of luxury goods in Asia is booming and the brands behind the scenes know it. Recently, Versace closed down some of its European and American stores to refinance and focus on its Chinese and Indian operation. The Korean market alone has grown 78 per cent since 2005 and is still expanding. If the Prodos-Samsung marriage works out and they deliver collections that deserve Gianfranco Ferré’s signature high price tag, profit shouldn’t be a problem.
“The brand signifies Italian luxury and has a great heritage,” says Manfred Abraham, strategic director at Interbrand. “It is fully extended across all categories with perfumes, bags, leather goods and sunglasses, so if you get it right you could make a lot of money very quickly. If you buy a younger brand, you still have to invest into all these categories and build from scratch.”
The Asian market is good at taking luxury brands and maintaining them rather than injecting them with innovation. The industry looks on eagerly at Gianfranco Ferré’s last chance to shine again.