Mariella Burani Fashion Group

Type: Public Company
Address: Via della Repubblica 86, Cavriago, I-42025, Italy
Telephone: (39 0522) 373131
Fax: (39 0522) 576922
Web: http://www.mariellaburani.com
Employees: 2,480
Sales: EUR 672.6 million ($758 million) (2006)
Stock Exchanges: Milan London AIM
Ticker Symbol: MBFG
Incorporated: 1999
NAIC: 315232 Women's and Girls' Cut and Sew Blouse and Shirt Manufacturing; 315292 Fur and Leather Apparel Manufacturing; 316214 Women's Footwear (Except Athletic) Manufacturing
SIC: 2331 Women's/Misses' Blouses & Shirts; 2371 Fur Goods; 2386 Leather & Sheep-Lined Clothing; 3144 Women's Footwear Except Athletic

Mariella Burani Fashion Group (MBFG) is one of Italy's fastest-growing designers, producers, and distributors of what the company calls "accessible luxury" clothing, leatherware, and accessories. Through an impressive string of acquisitions both in Italy and elsewhere in Europe, MBFG's revenues had soared by 500 percent since its initial public offering (IPO) in 2000, nearing EUR 675 million in 2006. The company operates four primary divisions: Apparel, Leather Goods, Digital Fashion, and Fashion Jewelry.

Apparel is the group's core business, generating 51 percent of its revenues primarily from its flagship Mariella Burani brand family, as well as from René Lezard, Mila Schön, and others. These account for more than 90 percent of the group's apparel sales. The company also produces clothing under license for such labels as Mugler (Thierry Mugler), Anglomania (Vivienne Westwood), and Fuchsia (Emmanuel Ungaro).

MBFG's Leather Goods division, launched at the beginning of the 2000s, contributes 32 percent of the group's sales and is grouped under publicly listed subsidiary Antichi Pellettieri. The group's leather goods brand stable includes the Sebastian and Baldinini shoe brands; accessories through the Braccialini and Francesco Biasia brands; and, since 2006, a 51 percent stake in leather handbag and accessories group Coccinelle.

The company's small Digital Fashion division is a provider of software and web-hosting services to the fashion industry, including the operation of fashionweb.net for Italy's Chamber of Commerce. MBFG's Fashion Jewelry Division is its youngest, having been launched in 2007 following the acquisitions of 51 percent of Facco Corporation SpA, 50 percent of Rosato SpA, and 60 percent of Valente Gioiellieri SpA.

MBFG has long pursued a vertical integration strategy. In addition to producing most of its clothing, leather goods, and accessories and jewelry designs in its own factories, the company has built up its own international network of retail stores. These include more than 310 directly owned or franchised single-brand boutiques and nearly 2,000 multibrand stores and department stores. The company also distributes its brands to nearly 8,000 retailers throughout the world. Italy remains the company's single largest market, at 36 percent of sales, while the rest of Europe represents 52 percent of sales. The group is also present in North America, as well as in Japan and elsewhere in Asia. Mariella Burani Fashion Group remains controlled by the founding Burani family, with Giovanni Burani serving as its chairman and CEO. The company is listed on the Milan stock exchange, and, since 2007, on the London AIM exchange.

From Baby Clothes to Women's Fashion in 1970

MBFG had its roots as a small manufacturer of baby clothing, set up by Walter Burani in his hometown of Reggio Emilia, in the Emilia-Romagna region south of Milan. Founded in 1960, the Burani company's original name was Selene SpA. Burani's partner in the business was his wife, Mariella Burani, who took charge of the company's design operations. By 1970, the Buranis were ready to make the leap into the far larger market for women's fashions, launching their first collection that year.

Selene began narrowing its operations in the early 1980s, with a focus on the women's ready-to-wear market through most of that decade. By the end of the 1980s, the Mariella Burani label had grown into a small, but respected midlevel brand, building its reputation on Burani's highly feminine designs. An important factor in the group's growth during this period was its decision to develop its own retail distribution operations. The company's first store opened in Milan in 1986 under the Mariella Burani name. In 1988, the group decided to focus its retail expansion on opening single-brand boutiques. By the early 1990s, the company operated nearly 25 directly owned or franchised stores, primarily in Europe but also in Japan. The company made its entry into the United States in 1993, opening its first store in Beverly Hills, as a testing ground for a future launch in New York City.

Another factor in the company's growth through the 1990s was its decision, starting in 1988, to develop a portfolio of licensed designer labels. The company's focus on what it called the "accessible fashion" market (midlevel designer fashions) made it an important partner for a growing number of major design houses. The company secured a major contract, for example, when it gained the license for the Carisma and Carisma Rouge collections created by Valentino. Other successes included the global license for ready-to-wear and "comfortable size" collections created by Gai Mattiolo, awarded in 1996. The following year, the company extended its partnership with that design house, gaining the license for Gai Mattiolo's fashion jeans collection.

Walter Burani's sons, Giovanni and Andrea, took over the family business in 1999, while their mother remained in charge of the group's design operations. Under Giovanni's leadership, the company adopted a new strategy for the turn of the century. By then, the Italian clothing and fashion industries had come under new pressure, particularly from the growing numbers of imports from India and China. At the same time, the fashion industry was undergoing a rapid consolidation, led by such luxury behemoths as LVMH, which began buying up Italy's typically small, family-run clothing and textiles companies. In order to survive, the Buranis recognized that their company needed to adapt to the new marketplace.

Going Public in 2000

Selene launched an acquisition program designed to expand the group's manufacturing and design operations while increasing its geographic focus, and, importantly, diversify its range of products. The company's first major acquisition came in 1999, when it acquired Dimensione Moda, a knitwear company marketing under the Laura Casini brand.

In that year, too, the company acquired a 50 percent stake in Mila Schön. That design house, launched by the designer of the same name in 1958, had been acquired by Japan's Itochu in the mid-1980s, growing into a highly respected designer name in the Asian region. The purchase of Mila Schön not only gave Selene a second major label, it also added 20 new stores to the company's retail network, which by then included 21 directly owned stores and 54 franchised stores. During this time, the company changed its name to Mariella Burani Fashion Group. MBFG's early acquisitions into the end of the decade had helped the company boost its revenues from just $52 million in 1997 to $144 million by 1999.

The company continued to seek new licenses. In 2000, the company began a short-lived production and distribution agreement with Calvin Klein, in part to support a brief effort by the company to expand its U.S. profile. As it prepared for its public offering in 2000, MBFG's focus fell more sharply on building up its own portfolio of designer labels.

Acquisitions formed the heart of this new growth strategy as the company sought to position itself as a leader in the growing "accessible luxury" market, positioned between high-end houses such as Prada and Gucci, and traditional mid-market groups such as Benetton. Indeed, between 2000 and 2007, the company carried out more than 20 acquisitions. Most of these were for relatively small companies, which found themselves increasingly unable to compete by themselves in the highly competitive fashion market during this time. In 2000, for example, the company acquired a new knitwear label, Gabriella Frattini. MBFG's acquisition targets also served to support another component of its expansion strategy to diversify its operations into other luxury goods categories.

This led the company to enter the leather goods sector in 2000, with the purchases of two leather goods designers, Braccialini and DeiMutti. These acquisitions also strengthened the group's licensed production wing, adding customers including Vivienne Westwood. By 2001, the company had completed four new acquisitions in the leather goods sector, including the footwear labels Baldinini, Mario Cerutti, and Mafra, and leather apparel group Enrico Mandelli. In that year, MBFG created a new subsidiary, Antichi Pellettieri, as a holding company for its leather goods operations.

"Miniature" Fashion Holding Company in the 21st Century

By 2003, MBFG was well on its way to building what the Financial Times described as a "miniature fashion holding company," with total sales nearing EUR 275 million. With its new leather goods division growing strongly, the company targeted new areas of expansion. The company bought the Sahzà design house from GFT, adding its label as well as its network of 13 in-store boutiques. MBFG also branched out from its core women's wear operation through a joint venture producing and distributing men's and children's clothing with Stephen Fairchild.

In 2002, the company expanded its geographic base, buying a 50 percent stake in Germany's luxury clothing label René Lezard Mode GmbH. MBFG also expanded its retail holdings, buying the Revedi group, which gave the company 18 retail outlets, including its first stores in Switzerland. At the same time, the company increased its vertical integration, buying a Como-based producer of silk and jersey fabrics, ITM SpA, in a deal worth $10.7 million.

MBFG's next acquisition came in 2003, when it took on a 60 percent stake in the business of noted Italian leather handbag designer Francesco Biasia. In November of that year, the company had also purchased Le Trico Perugia SpA, a knitwear specialist, for EUR 5.4 million. By then, MBFG had also moved to raise fresh capital for expansion. The company sold a 33 percent stake in the family's holding company to Interbanca,and then sold 30 percent of Antichi Pellettieri to L Capital, an investment fund attached to the LVMH empire. That deal raised an addition EUR 110 million as the company continued its search for acquisition candidates. It also provided Antichi Pellettieri with agreements to begin manufacturing products for the LVMH group.

Retail operations represented another growth area for MBFG. By 2004, the company's operations included more than 150 boutiques. In that year, the company also launched a new multibrand boutique format, simply called Mariella Burani, in Pescara. The new format featured the full collection of the company's leather good brands. In another international expansion effort, the company acquired Don Gil GmbH, based in Austria, adding its 38 retail stores. MBFG opened a flagship Braccialini store in London, its first in the United Kingdom, and also turned its attention to the Eastern European markets, opening six stores in Russia and elsewhere. By the beginning of 2005, MBFG's retail operations had grown again, this time with the acquisition of Bernie's AG, a leading luxury goods retailer in Switzerland with 16 stores.

MBFG returned to the market in 2006, carrying out a public offering of Antichi Pellettieri on the Milan stock exchange. The listing raised another EUR 130 million for the company, which showed little sign of slowing down its expansion. Indeed, by 2007, MBFG itself returned to the market, placing 23 percent of its shares on the London Stock Exchange's AIM market, adding another EUR 130 million to its coffers. In the meantime, MBFG had completed several new acquisitions, including the purchase of 51 percent of Coccinelle SpA, a leading leather handbags and accessories producer with operations in Italy and Germany.

With both its apparel and leather goods divisions growing strongly, MBFG in 2007 launched a new division: Fashion Jewelry. For this, the company set about building a portfolio of luxury jewelry brand holdings, including 51 percent of Facco Corporation; 50 percent of Rosato SpA; 60 percent of Valente Gioliellieri SpA; and 51 percent in Calgaro SpA. At the same time, the company launched a fashion jewelry joint venture with Damas Jewellery. By then, the company's sales had risen past EUR 675 million, representing an increase of more than 500 percent since its IPO in 2000. For MBFG, the leading ranks of the accessible luxury segment appeared entirely accessible in the 21st century.

Principal Subsidiaries

Antichi Pellettieri SpA; Baldinini SRL; Bernie's AG (Germany); Braccialini SRL; Coccinelle SpA; Coccinelle Store France S.A.; Coccinelle Store GmbH (Germany); Design & Licenses SpA; Don GIL GmbH (Germany); Enrico Mandelli SpA; Faccio Corporation (51%); Francesco Biasia SpA; Leather Apparel SRL; Longwave SRL; Mariella Burani Retail SRL; Mariella Fashion SL; René Lezard Mode GmbH (50%, Germany); Revedi SA (Switzerland); Revedi SpA; Sedoc.It SRL.

Principal Divisions

Apparel; Leather Goods; Digital Fashion; Fashion Jewelry.

Principal Competitors

Christian Dior S.A.; LVMH Moët Hennessy Louis Vuitton S.A.; Industria de Diseno Textil S.A.; DELTON AG; Coats Holdings Ltd.; Mango S.L.; Cortefiel S.A.; Devanlay S.A.; Alexon Group plc.

Further Reading

Braithwaite, Tom, "Burani Brings Italian Style to AIM and Raises Euros 130m," Financial Times, June 16, 2007, p. 18.

"Burani Developments," WWD, September 1, 2006, p. 2

"Burani Purchasing Stake in Baldinini," WWD, February 1, 2001, p. 11.

"Burgeoning Burani," WWD, November 19, 2003, p. 2.

Ilari, Alessandra, "Burani Group Acquires ITM for $10.7M," WWD, March 26, 2002, p. 7.

Kapner, Fred, "Burani Enters Big League," Financial Times, September 27, 2003, p. 9.

"Mariella Burani Raises EUR 130m in London IPO," just-style.com, June 15, 2007.

Sylvers, Eric, "Stretching to Survive, Italian Fashion Firm Grows from Its Roots," International Herald Tribune, February 17, 2007, p. 14.

Zargani, Luisa, "Burani Buys Two Leather Firms," WWD, November 6, 2000, p. 16.

------, "Burani IPO Will Kick off Expansion, Acquisitions," WWD, July 10, 2000, p. 11.

------, "Burani Net Skyrockets Thanks to Top Brands," WWD, April 1, 2004, p. 13.

------, "Burani Set to Sell Pellettieri Shares," WWD, May 23, 2006, p. 3.

— M. L. Cohen