Gianvito Rossi could be OTB’s next step
Renzo Rosso, founder of the Diesel brand and chairman of Italian fashion group OTB (Only The Brave), is in advanced talks to buy a majority stake in upmarket shoemaker Gianvito Rossi, industry sources with first-hand knowledge of the matter said. OTB, which is aiming to float in Milan next year or in early 2025 at the latest, has made no secret of its appetite for acquisitions.
The Italian fashion group is fighting competition from Cartier owner Richemont, but OTB is likely to be chosen as the preferred bidder and should strike a deal with the Italian shoemaker soon, six different industry and banking sources said. “It is expected that OTB will be chosen as the preferred bidder and a deal could be announced in the next few days – if all goes well,” one Milan-based banking source told Miss Tweed on condition of anonymity. Several industry sources said Armani also looked at the brand, but talks have not gone went very far. “Armani is not equipped to handle such an acquisition, it’s not in their DNA,” one of the sources added. “While Richemont has little experience with luxury shoes.”
OTB’s most recent acquisition was Milan-based brand Jil Sander in 2021. Before that, it bought Los Angeles’ brand Amiri in 2019 and Italian brand Marni in 2013. Renzo Rosso’s Only The Brave group also owns Maison Margiela. His son Stefano Rosso, already an OTB board member, has just become Margiela’s chairman. The OTB group is usually more into streetwear, edgy and quirky aesthetics than Gianvito Rossi’s timeless elegance. “However, there are not that many brands on the market,” one industry source said. “That’s why they are so keen to buy Gianvito Rossi.” OTB declined to comment.
Gianvito Rossi is estimated to generate around €100 million in sales and an Ebitda (earnings before interest, tax, depreciation and amortization) margin of around 25 percent. The designer is keen to retain a 25 percent minority stake. He is hoping his brand will fetch a valuation of between €350-€400 million, the sources said.
COMFORTABLE SHOES
Gianvito Rossi, son of the famous Italian shoemaker Sergio Rossi, made a name for himself by launching his own eponymous brand in 2006. His stilettos, which cost between €600 and €900, are regarded as ultra-feminine and sensual and usually feature thin straps. They are among the only luxury high heels women can wear for hours without being in pain thanks to their lightly cushioned insoles – a secret Sergio Rossi passed on to his son. On its website, the brand describes them as comfortable must-haves for every wardrobe, “from casual days to red carpet.” Gianvito Rossi also sells a few belts and clutches, but it does not have much potential to branch out into other categories, industry experts say.
The brand’s designs are regarded as more audacious and innovative than Sergio Rossi’s as the latter are quite conservative with classic buckles and thick straps. Sergio Rossi died from Covid-19 complications in 2020 at the age of 84. Gianvito also suffered from Covid during the pandemic and his son Nicola helped run the business during that difficult time. That’s when it became clear that Nicola was not ready – at least not yet – to take over the business if he so wished later, several industry sources said. He’s currently enrolled in a two-year MBA program at the Kellogg School of Management, part of Northwestern University in Chicago. He expects to graduate next year, he wrote in a post on his LinkedIn account. His sister Sofia and mother Monica “play key roles” at the company, the brand says on its website.
For many years, Gianvito Rossi hesitated between going it alone or teaming up with a company with bigger pockets that could finance the opening of more boutiques, particularly in key markets such as China. During the pandemic, the brand’s sales were badly hit by the absence of events and occasions to wear high heels. Before that, Gianvito Rossi, like many other high-end rivals including Jimmy Choo and Christian Louboutin, suffered from the market’s new-found enthusiasm for streetwear and sneakers.
In the past two years, demand for stilettos has come roaring back. With sales back on the rise, now is a good time for Gianvito Rossi to put itself on the market, the sources said. Italy’s MF Fashion media reported that starting in 2021, Gianvito Rossi’s sales rose in the high double digits, helped by new stores in the Middle East and Asia – and in 2022, the brand’s revenue from its directly operated stores rose more than 50 percent. Contacted by Miss Tweed, a spokesman for Gianvito Rossi declined to confirm these figures and did not wish to comment on its talks with OTB. He would not even provide information about the brand’s history or number of stores. Gianvito Rossi, the designer, is a rather shy person who rarely gives interviews.
INDUSTRIAL PARTNER
Gianvito Rossi was bent on working with a big fashion and luxury group and did not want to team up with a private equity firm, the sources said. LVMH was not interested. The group’s investments in luxury shoemaking have not produced notable successes up until now. In 2020, the industry leader split from young shoe designer Nicholas Kirkwood after seven years. In 2014, private equity firm L Catterton bought Giuseppe Zanotti, but the brand is understood to be losing market share compared to rivals such as Exor-backed Christian Louboutin. Last month, Capri’s Jimmy Choo reported a 3 percent drop in sales in the first quarter to $151 million.
Kering, which is always on the prowl for acquisitions, did not express interest in Gianvito Rossi, industry sources said. That’s pretty understandable. It has spent enough money on the Rossi family as it is. The French group lost more than €200 million trying to revamp Sergio Rossi for more than 15 years, between the losses it had to finance and the price it paid for the brand. Sergio Rossi was founded by Gianvito’s father in 1951 in San Mauro Pascoli, near the Adriatic Sea. Like some other major Italian brands such as Ferragamo, it never succeeded in becoming particularly relevant in today’s highly competitive fashion world.
Sergio Rossi was the third luxury brand the Pinault family invested in after Saint Laurent and Gucci in 1999. The Gucci Group, which was the name of the Pinault luxury arm at the time, bought a 70 percent stake in Sergio Rossi for $96.2 million and acquired the remaining 30 percent in 2005.
The Pinault family invested in the expansion of the brand’s shoe factory outside Florence, which produced for rival brands such as Hermès and Dolce & Gabbana. The strategy was that it would make shoes also for its own brands like Gucci, Saint Laurent and the others it would later acquire. But none of them heeded its demand. As a result, Sergio Rossi’s beautiful and best-in-class factory was not used to its full potential, industry sources say.
CONTROL
It is interesting to note that even though the Pinaults owned Gucci and Saint Laurent, they could not force them to adopt a given manufacturer. The Italian and the French brand wanted to continue working with their usual partners and build their own facilities. Critics say this highlighted already the lack of control that the holding structure today called Kering is perceived to exert on the brands it owns. This remains an area of concern for investors, particularly after last year’s Balenciaga PR fiasco from which the brand continues to suffer.
In 2015, Kering sold Sergio Rossi to Investindustrial, an Italian private equity fund run by entrepreneur Andrea Bonomi. Kering was so keen to get rid of Sergio Rossi that it agreed to recapitalize the company, injecting more than €20 million to encourage Investindustrial to buy it. A few years later, in 2021, Chinese conglomerate Fosun, owner of Lanvin, Wolford and a few other fashion and luxury brands, bought Sergio Rossi for one symbolic euro. Sergio Rossi is understood to still be operating at a loss and its strategy is unclear. Its factory, however, still produces shoes for Amina Muaddi. Its CEO Riccardo Sciutto, who continues to own a stake in Sergio Rossi, left the company at the end of May.
One thing is for sure: the use of the Rossi name by Gianvito, who effectively took the Pinault family’s money to set up a rival brand with help from his father, has not helped Sergio Rossi’s fortunes. The Pinaults could not prevent Gianvito Rossi from launching a brand under his own name. Gianvito Rossi’s success clearly overshadowed the Sergio Rossi brand. When Sergio Rossi was put back on the market two years ago, Gianvito, the designer, tried to buy it, but he did not have sufficient funds and determination to develop it. Having turned the page on the Sergio Rossi era, he’s now hoping OTB will help the Gianvito Rossi brand conquer new markets.