Diary: Love and Money

“I’ve got Ferragamo under my skin.” Michele Norsa, chief executive of the Italian shoe brand, was almost singing during his keynote address. He’d been hired by the family-run firm to transform it into a public entity – he was the professional manager, the moneyman, he acknowledged, but at the same time, “if you don’t love your product or brand, it will be hard to create value.”

And yet, a panel later, Abel Halpern, managing director of the private equity firm HMD Partners, announced “my world is simple; black and white: I want to make money, I don’t care how pretty something is,” and Neil Clifford, chief executive of Kurt Geiger, said, “in the end, it’s all about the numbers.”

It was left to Marco Franchini, chief executive of Bally, the Swiss brand owned by Texas Pacific Group, to mediate between the two. “Fashion people don’t like to talk about EBITA,” he said, “and private equity people don’t like to talk about colours, but we are learning to talk to each other a bit.”

Yet is private equity as enamoured of the money to be made in luxury as everyone currently seems to think it is? Luc Vandevelde, managing director of Change Capital Partners, which owns Jil Sander, though not. “Fashion/luxury is not the ideal industry from a private equity point of view,” he said. “It’s a relatively volatile sector, and we don’t like volatility, with very high multiples and low debt. I think it will remain underrepresented in private equity portfolios.” Of course, he also said if there was an opportunity in luxury, private equity would take it. But “you need too passionately believe and feel a business to invest.” Oooh. Those pesky emotions again.

They can hinder as well as help, after all, noted Gilbert Harrison, Chairman of Financo, pointing out that family luxury businesses often got into big trouble because second and third generations couldn’t separate their feelings about each other (competition, jealousy) and their possessiveness over a company that often had their name to its benefit – they couldn’t sell, or bring in outside management (hat tipped to the Ferragamos). “Some people say selling the business is like selling a child,” he observed.

“Not me,” said Laudomia Pucci, deputy chairman of Pucci and the founder’s daughter. “I knew I couldn’t do what this company needed on my own. I didn’t have the design or management resources to grow it to any real degree.” So when LVMH came calling, she sold them 66 per cent. “Everyone told me to leave the company the moment I sold it, but I stayed on because I though I could add some value.”

“You just have to really know your partner,” said Roberto Vedevotto, managing director and chairman of European luxury goods, Lehmann Brothers. “Spend time with them, talk to other brands they own.”

“And if private equity buys a minority stake, find out what their time-line is,” said Harrison. “Because after that’s up they’re either going to want you to buy them out or take a majority stake.” And then it all ends in a fairly ugly divorce.

Sex

With all that talk about partners, connections, and amore, someone had to bring up the S word. Enter Philippe Starck, creative polyglot, and his privé sofa for Cassina, a terrifically slim-line, chic piece of furniture that doubles as a seating area and one for…more personal events. But that wasn’t the reason Starck wanted to talk about it (though he did have a rather graphic slide demonstrating the sofa’s various functions). The reason he wanted to talk about it was to emphasise the point that every piece of good design starts with a concept. Starck didn’t just make a sofa that looked nice; he thought about what a house needed first. “Ok,” he said. “You’re bored with the bed. What are the options? The car trunk and the rug. Not so comfortable.” Hence the sofa. For him, luxury equals intellectual elegance. Judging by the applause, most of the room was prepared to buy into the idea.