Intervista al Dott. Miroglio su CLASS CNBC TV

Well, first of all, in China we have a consolidated presence that goes back several years. We began our initial expansion in 2004 with a joint venture that over the years has been very successful. We acquired 50% of a local Chinese retailer in 2004. Over these seven years we have had truly exponential growth. This gave us the courage over time to strengthen our Chinese presence by opening direct retail stores under our own Motivi brand, which today has 45 stores in China. But above all, it gave us the conviction that we can truly play a leading role in the Chinese market. Hence the desire to think bigger, to create a partnership with the Mandarin fund to build a real multi-brand group, a collection of brands that can combine our own labels and companies to acquire, to have a fully integrated company of great importance in the Chinese market. Undoubtedly, we know that the Chinese market is probably the most competitive market today and will be the most competitive in the coming years because it gathers European, American, local Chinese, and Asian competition. However, it is the market that today offers the most interesting development rates, and therefore I believe it is necessary to have a strategy for China. An aggressive strategy for China.

But undoubtedly, the first update was greater clarity—greater clarity in the ownership structure. I think this is fundamental to give the company, employees, and all those who work in the company a sense of security about the present and the future. It has also allowed us, I must say, who in a way have taken up the baton for the future, to truly believe that today we have all the levers in hand to make an impact. So I really have to say that starting from the end of 2009, when this corporate change began, a new chapter began for us, a turning point. We started working on a new company.

Well, today management is certainly a preponderant presence. It is today and will be even more so in the future. Our group wants to make the family tradition a very strong baggage of experience and knowledge, and we want to consider it, as always, a great added value. But for it to turn into an added value and not be in some way a brake on growth, we believe it is important to see the family business as a modern family business—not a paternalistic company, but one that can combine a family vision (therefore more medium to long term) with the presence of managerial talents that are indispensable for being able to seize all the great and notable challenges that the world offers us today. For four years now, the company has been opened to independent directors. The chairman is a long-time manager like Carlo Callieri. These are signals of the intention to one day also open the share capital to third-party shareholders, for example through a stock exchange listing—should the stock market stabilize. But at the moment it is not in our plans. Our plans to go public? This is because our group fortunately has no financial need to raise capital; on the contrary, we have a very significant net financial position. So certainly the financial aspect does not touch us. We could certainly consider making agreements as we did with Mandarin, if we find partners, if we find agreements that can bring us synergies at an industrial level, at a business level, especially that can allow us to achieve our goal of international growth. So listing is not currently in sight, but certainly greater flexibility at the shareholding level compared to the past is in our DNA.

Actually, we are not very small, but we are still small because beyond the overall global size of the group, which is quite significant at one billion euros, in reality this billion euros is made up of a plurality of many small to medium-sized businesses. So this challenge of becoming big is a challenge still ahead of us, but we feel we can take it on and certainly win.

A good part of your product? The industrial part was our soul until a few years ago, our roots. Our company was born and grew as an industrial company both in textiles and clothing. Ten years ago, a transformation began that was in a way unconscious but definitely important. The company that ten years ago was 90% industrial is now 70% commercial—a retail-oriented company. Despite this, we consider the industrial part still an important value for our company because we believe that in order to ensure a distribution chain a product of quality and at a suitable price, it is necessary to know the craft behind it, to know all the industrial levers.

Certainly, intellectual property is a current issue, especially in markets where the concept of intellectual property is not as pervasive as it can be in Italy and Europe. At the moment, we don't have very significant problems from this point of view. However, certainly the research on electronic tags allows us to prevent potential problems. For us, the electronic tag is also an important efficiency factor since it allows traceability of the garment, especially before putting it on sale. It can give us great advantages in terms of logistics and merchandise handling.

I would call the creativity of our brands a 'diffused creativity'. For each of our brands—and we currently have ten brands in our portfolio—each brand has its own team of creatives, stylists, designers who collaborate with external style studios and external creatives. It is from this combination of internal and external that the creativity of all our collections is born. Furthermore, considering that creativity is one of the absolutely scarce elements on the market today, about ten years ago we decided to promote an internal creativity school, which is now giving us good results. Over the years, it has allowed us to bring into the company about a hundred new young creatives who represent the future of our company.

No, at the moment the only partnership we have active is with Krizia. We are one of—I believe the only company—that has implemented a license for plus sizes, comfortable sizes, with an important label like Krizia. It is a license that gives us excellent results, but at the moment we do not plan to expand it.

The first half—I should preface by saying it was not a particularly brilliant half. We had a turnover of around 450 million euros, which remained in line with 2010. However, the increase in raw material costs, which in our sector was quite significant—in some cases, on certain fibers, we saw up to a 50% increase—and the increase in labor costs in various global sourcing markets led to a general increase in product costs. Combined with a growing trend from the end consumer towards more affordable products, this caused a fairly significant margin compression that was felt. Despite this, I would say that prudent management, especially regarding cash flow, which I believe is absolutely important at this time, allowed us to have a net financial position of almost 260 million euros active, which actually increased compared to the previous year.

We have a process of scouting and due diligence in collaboration with Mandarin already underway for a few months. We have already identified four or five potential targets. They are retail brands operating in Chinese fashion retail. Our goal is to be able to close a deal by the first quarter of 2012.

In Russia, we actually already have a fairly important operational base. We currently have about sixty stores under our brands, especially Motivi is the brand most present in the Russian market. However, we have very recently decided to change our organization in strategic markets on international markets, starting with Russia. As of September 1 of this year, we created a permanent structure for the development of the Russian market, creating a position of Managing Director Russia, inserting a person—actually an internal growth of a resource of ours that we wanted to develop in her career path. This person will become fully responsible for strategy execution in the Russian market. In practice, this means we will no longer have what we consider to be a weakness: conducting a complex business like a business in emerging markets such as Russia and China from Alba, Italy, delegating and decentralizing important decision-making levers, including product, collection adaptation, marketing strategy adaptation to the local market. We believe it is truly important to know the market and adapt to local markets.

Well, we feel strongly rooted in Piedmont, in Alba. Our entire family lives in Alba, so we have a very strong presence. We also have a very important bond with the territory. We love our territory, but we realize that it is increasingly important to think globally, to be able to overcome the boundaries not only of Alba but of Italy, because to be a global player you really need to have a significant open-mindedness. And we are doing this thanks to openness to external managers who come from outside, who have experiences not only outside our company but outside Italy, who can enrich us and integrate the knowledge and the great experiences that we have as Piedmontese.