Renzo Rosso on Key American Market, M&As and Potential IPO Timing
MILAN — Renzo Rosso has come a long way since his first trip to New York more than four decades ago, but for the entrepreneur, the American Dream remains as real today as it was back then.
“I feel so close to the U.S., and it continues to be a priority for me. It is the country where I invest the most, with China,” said the founder and president of the OTB group, ticking off “James Dean, chewing-gum, jukeboxes and Coca-Cola” as some of the most fascinating and enduring idols from America in his mind.
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“When I was 20 and first arrived at JFK [airport], I didn’t know a word of English, yet I felt immediately at home,” he said, smiling at the recollection and marveling at the fact that Diesel’s first show by Glenn Martens, presented digitally on June 21 for spring 2022, was livestreamed on Times Square.
The love is mutual, as North America, which accounts for around 10 percent of group sales, is expected to see a growth rate almost double of that forecast for the rest of OTB globally. In a three-year business plan, OTB is expected to report annual growth in revenues of 15 percent, with North America forecast to increase 27 percent year-on-year.
Investments totaling $250 million are planned in the next three years and “a big portion” of that amount is earmarked for the U.S., the entrepreneur said.
As part of the plan, expanding OTB’s retail distribution in the U.S. will be key.
The fashion group comprises Diesel, Maison Margiela, Marni, Jil Sander, Viktor & Rolf and a stake in Amiri, as well as production arms Staff International and Brave Kid.
Courtesy of Diesel
In addition to the relocation of a Diesel store in New York, five new units for the brand are set to open in the U.S. in 2021. In Miami, Diesel will open 143 contract apartments with Wynwood, which will be completed in a few years, as the work was stalled by the pandemic last year.
By the end of 2021, there will be 16 directly operated Diesel stores, six Marni and five Maison Margiela units in the U.S.
“It’s a magic moment in the U.S. now, since the arrival of President [Joe] Biden, stimulating the economic development; there’s so much energy and a desire to invest,” Rosso said. “Sales in all our stores in the U.S. are growing.”
Rosso was open about discussing Diesel USA’s Chapter 11 filing, although it’s “in the past,” he underscored, as the brand is now profitable. “I can say it with joy and I am very proud of this turnaround. I thank Stefano [his son and former Diesel USA chief executive officer] for the wonderful job he’s done in cutting costs, putting in place a more selective distribution that is in line with the brand by slashing the number of stores by 50 percent, and raising the profile of the label,” Rosso said. “If we had been a public company we could not have done that.”
Rosso has over the years hinted at the possibility of one day publicly listing the group and, asked to provide a possible time frame, he said that, given the three-year business plan, it would “not happen before three years.”
He touted “an already solid, well-structured and well-managed group,” admitting an IPO would also help provide “more transparency and solidity in the management of the company and in the generational shift.” Rosso has seven children, and he believes that, even if and when OTB will be a public company, the family should hold a majority stake.
Last year, as reported, OTB saw a jump in its online revenues and 20 percent growth at Maison Margiela — bright spots for the group, despite the effects of the COVID-19 pandemic.
In 2020, group earnings before interest, taxes, depreciation and amortization amounted to 176 million euros, down 7.3 percent compared with 190 million euros in 2019.
In the 12 months ended Dec. 31, OTB’s consolidated sales amounted to 1.31 billion euros, a 14.3 percent decrease compared with 1.53 billion euros in 2019, the year the company was back in the black.
Diesel, after a reorganization and repositioning of its retail and wholesale channels, continues to be a core business for OTB, accounting for more than 50 percent of sales.
The U.S. is where Diesel will stage an event by the end of the year to present a new line of sneakers, possibly in New York and Miami. Given the increasing importance of the category, Rosso has tapped five new designers dedicated to sneakers and a technician specialized in research and development “from one of the biggest sneaker companies around,” he said, without naming it.
Rosso trumpeted Martens’ creativity, which combined with Diesel’s techniques and know-how, he believes are a recipe for success. The Belgian designer, who joined Diesel as creative director last October, is launching a major project called Diesel Library, a genderless collection that will be introduced for spring 2022 as part of the group’s “For Responsible Living” sustainability initiatives — dear to Rosso and his son Andrea. The library will offer a wide range of evergreen and longer-lasting denim items, from pants and jackets to tops and skirts to name a few, with 50 percent of the overall denim collection having a permanent shelf life.
Rosso said the U.S. is a very successful market also for Maison Margiela, “the best in class,” and growing globally. There are five stores in the U.S. — one in Miami, one in Los Angeles, two in New York and one in San Francisco — and the goal is to open another unit in the U.S. by the end of the year. The first store with the new Margiela interior design concept opened in London, followed by Paris, Shanghai and Miami.
A Margiela store will open in Toronto at the end of the year or the beginning of 2022.
The group in fall 2019 renewed John Galliano’s employment pact for Maison Margiela. The designer was appointed creative director of the brand in 2014 and since then, revenues at the Paris-based house have more than doubled.
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Also in Miami, Rosso plans to reopen the Pelican Hotel, which he first unveiled in 1994 and was closed for renovation in 2020. The work will allow the hotel to expand by two rooms, reaching 30. “The location had become too commercial, but now [that] the mayor has closed four blocks and changed the layout, it’s become the true heart of Miami and a pedestrian-only area,” explained Rosso. In a real Art Deco building, it was faithfully restored to reflect that period. “I expect to open it before Christmas and I am currently seeking a partner to manage it.”
Marni is also performing really well at both its Bal Harbour store — a relocation with a new concept earlier this year — and its Madison Avenue unit.
At the end of June, a pop-up called Marni Marine at the Sunset Beach Hotel on Shelter Island, N.Y., opened “with a specific and unique concept and dedicated products,” Rosso said.
He noted that, thanks to creative director Francesco Risso, the brand’s “men’s wear is booming.” He admitted the creative change, when founder Consuelo Castiglioni exited in 2016, was a difficult moment of transition, “but now we are receiving offers to do capsules from brands, Marni is super cool.” To wit, Rosso extended Risso’s contract with Marni in December 2020.
In the U.S. next year, Marni and Margiela will both be available on the omnichannel platform supported by Moon, an in-house designed operating model, which also fosters the customer experience. With a major investment, Moon was first rolled out for Diesel in the U.S., followed by Europe.
Rosso, one of the few Italian entrepreneurs who has openly spoken of building a fashion conglomerate, also talked enthusiastically about his latest acquisition, Jil Sander, which he bought from Onward Holdings Co. Ltd. in March. “Day after day, I marvel at how beautiful, clean and sophisticated is this product, and I have a beautiful rapport with [creative directors] Luke and Lucie [Meier],” enthused Rosso, who from early on has said he does not want to change the creative direction of the brand. “I am involving them more and more actively in the company, beyond the creativity, I want their opinion.”
The Meiers’ designs have translated into a strong business, as Rosso revealed the brand registered growth in sales last year compared with 2019, despite the pandemic.
As per the most recent results available, in the financial year ended Feb. 28, 2019, Jil Sander’s revenues totaled 11.3 billion yen, or $104 million.
Rosso is hoping to open a temporary Jil Sander store in New York’s SoHo with a new concept conceived a year and a half ago. By the end of the year, he is set on opening Jil Sander stores in New York and Shanghai.
“From our online sales, we see a lot of demand for Jil Sander in the U.S. and we want to be there physically,” he said.
Rosso is also now eyeing the acquisition of specialized manufacturers, a strategy that allows a company to “become more solid and build know-how,” he explained, while protecting Italy’s unique supply chain. He is looking at different areas — handbags and footwear producers, as well as firms specialized in washes and treatments.
His group has been supporting artisans through the CASH program, which stands for Credito Agevolato [facilitated credit] Suppliers Help launched in 2013. Rosso is part of the strategic committee of the Camera della Moda and is a Confindustria delegate, representing the Made in Italy supply chain in front of the institutions.
OTB also has a minority stake in American brand Amiri, which Rosso defined as a “beautiful” label, citing perennial lines in front of the brand’s Rodeo Drive store and plans to open two new stores, in New York and Las Vegas this summer.
As reported, Paulo Redeem, a Philadelphia-based fashion brand, has won the inaugural edition of The Amiri Prize, 2021, established by Mike Amiri, founder and creative director of his L.A. men’s and women’s brand, as an annual fashion incubator established to inspire undiscovered American fashion talent by offering a support system outside the current establishment.
“We are working well with Mike [Amiri] and helping to expand the brand in Asia. He can rely on the structure and our financial help. We are developing a business plan, but he doesn’t want to open too many doors,” said Rosso, noting that Amiri sales will double in 2021 compared with 2020. Amiri, who established his company in 2014, fuses authentic L.A. rock ‘n’ roll and street culture. He has diversified into new categories across fine tailoring, accessories and shoes, and presents his main collections biannually at Paris Fashion Week. In 2020, he opened his first retail store on Los Angeles’ Rodeo Drive.
As for wholesale, which at group level last year accounted for more than one-third of sales, Rosso is busy converting corners for his various brands into concessions with America’s main department stores, from Neiman Marcus and Bergdorf Goodman to Saks Fifth Avenue and Nordstrom.
“We are becoming partners, as department stores are becoming destinations more and more, working to have fewer sites but more beautiful,” he said.
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