Palazzo Spini Feroni, the 13th-century headquarters of the Salvatore Ferragamo shoe dynasty, is a showstopper. Rich tapestries and paintings dress the walls of its high-ceilinged rooms. A landmark in Florence, its grandeur invariably reduces visitors to a hushed silence.
Yet Ferruccio Ferragamo, the chairman of the group and firstborn son of shoemaker to the stars Salvatore Ferragamo, remembers it in less opulent – and noisier – days more than half a century ago.
“When I was little, in the next room cobblers were making shoes,” he says tilting his head towards what is today one of several drawing rooms. “I can remember that lovely sound. It is a unique sound of a wooden last covered in leather, with a hammer tapping on top. It is musical, it gets in the blood.”
Blood is no small matter for the Ferragamo family. Shoes and blood ties have made this tribe, as its members like to call it, one of the world’s best known business dynasties.
Salvatore Ferragamo, the brand known for its bow-tied ballerina shoes, had revenues last year of €1.3bn and as of December had 620 stores worldwide. A third of its shares are listed on the stock exchange in Milan, while the majority of the company remains owned by more than 70 descendants of the shoemaker from Naples who made it big in 1920s Hollywood at barely 20 years old.
As a rags-to-riches story it has few equals. By the time Ferragamo returned to Italy in 1927 he had become so famous for his supple, stylish shoes that later stars such as Judy Garland, Marilyn Monroe and Sophia Loren came for personal fittings. He was even able to buy Palazzo Spini Feroni, initially renting out most of the floors to help fund the monthly payments.
Ferruccio Ferragamo, then a young boy, says he was always “impressed to hear my father was attending Audrey Hepburn or a queen of somewhere”.
But behind the fashion legend, the Ferragamo story is a study in how a second, third and fourth generation of descendants stuck together to turn their ancestor’s talent into a global business.
When Salvatore Ferragamo died suddenly and prematurely in 1960, he was famous for inventing the cork wedge and the steel-reinforced stiletto heel, but the company was making just 80 pairs of shoes a day. His widow, Wanda Miletti, was only 38 years old with six children aged from 17 to two. Ferruccio Ferragamo, who was 14 years old, remembers the period as “a tragedy, it was a crisis for the company, he was a creative genius and it was a one-man company.
“When he was gone, we thought everything was gone; instead I think we got stronger, we got very united by the tragedy,” he says.
“My mother – I don’t know where she found it but she found a lot of energy. And we didn’t just produce shoes we produced children, so now we have a very large company,” he adds.
Mr Ferragamo, 69, puts the success of the company down partly to the innovation of his father, who filed more than 350 patents on shoe design, – the company archive houses drawings of 14,000 different shoe styles – and a group of “faithful” external managers. The Ferragamo business now ranges from women’s and men’s shoes to clothing, handbags, scarves and ties.
But he admits that at the centre of the business remains his mother, who has been the driving force behind the family. In conversation Mr Ferragamo, who is softly spoken despite his princely mien, refers frequently to her. “She was a second pioneer,” he says. When the company listed a third of its shares on the Milan stock exchange in July 2011, Mr Ferragamo stepped on stage to hug his mother as she wiped away tears, talking of how proud she was of her family’s achievement.
At the insistence of Signora Wanda – as the formidable Ms Ferragamo, now 93, is universally known – all family members are paid the same, and have the same portion of company shares.
Mr Ferragamo says at first he thought “it was very unfair as I had more responsibility”. But ultimately, he realised clear rules would help the company to thrive.
The rules have extended into the third generation – where management studies show family dynasties typically fail. A maximum of three Ferragamo family members from the third generation are allowed to work in the business, and only if they have proved they are asuitable fit and well enough qualified.
“We put the rules [in] because without them, we’ve seen many examples of companies where the family fell apart and they ended up selling,” he says. “I have always told my children, since they were very young, I will always put the interest of the company first, not their immediate interest. Because by acting in the interests of the company it will be in their interest, but if I put their interests first I may ruin the company.”
Michele Norsa, previously at another family group Marzotto, was brought in as chief executive in 2006 to carry out an initial public offering. The hiring of an outsider was part of the plan for long-term survival. Salvatore Ferragamo’s shares have doubled in value since the 2011 listing.
A holding company owned by the siblings of the second generation holds 56 per cent of the shares in the listed company. While shares from the holding cannot be sold – at least in this generation – all family members are free to sell their shares in the listed company.
Nonetheless, Mr Ferragamo admits the experience of the families behind the Hermès luxury brand – where LVMH bought a 23 per cent stake without the family’s knowledge or consent – is very much a concern. “We want to avoid the condition when someone can step into your company, or steal it or take it away,” he says.
As their wealth has grown so have their business interests. Mr Ferragamo and his brother Massimo, chairman of Ferragamo USA, both own vast estates in Tuscany, Il Borro and Castiglion del Bosco, which are luxury resorts and vineyards. Each year the entire family gathers at Il Borro to discuss the business.
His father’s fervour for the US still burns bright. Even though Asia Pacific is its biggest market, Mr Ferragamo calls the US, which makes up a fifth of Ferragamo’s sales, as “our second home town”.
“If I didn’t live in Italy I would live in the US,” he says. He adds that his brother Massimo would never leave the US to return to Italy. “His children are always saying, ‘when are we going back home?’ And he says, ‘no way’,” he adds with a smile.
And what about his own children? Bankers consider the company could be ripe for takeover when the next generation assumes power in spite of all the efforts by Salvatore Ferragamo’s widow and her children to ringfence the group.
James Ferragamo, one of Mr Ferragamo’s twin sons, who works in the women’s leather products division of the business, is tipped to lead the family’s third generation into senior management. Would he like his son to succeed him as chairman? “If it is the right thing for the company. If it is not, I prefer he was a rich shareholder than a poor chairman.”
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