Feb 11, 2009
Crisis helps Furla nab high-end luxury buyers
Feb 11, 2009
By Deepa Babington
ROME (Reuters) - Italian luxury bag maker Furla has won clients from higher-end brands in a sign "affordable luxury" companies are weathering the global downturn better than most, its chairman said.
The family-owned firm targets young, professional women with trendy leather bags at prices considered within their reach - between 250 and 400 euros on average. "We're getting a lot of clients that are trading down from other brands," Giovanna Furlanetto told Reuters in a telephone interview.
"They're pulling back, so if they find a product with good quality and a known brand then they're willing to take a step back from costlier brands that they bought until yesterday."
Competitors have marked down prices to attract shoppers but Furla has done the opposite, focusing on higher-priced products to boost margins from customers who normally buy pricier brands.
Furla expects to report a rise in sales and profit in 2008, albeit at a slower pace than in previous years, Furlanetto said.
Echoing other Italian retailers who have said post-Christmas sales were better than feared, Furlanetto said Furla's January sales also rose from a year earlier.
The firm, which recently expanded into a line of bags for men and shoes for women, is keeping a tight rein on investments in the first half of the year.
It is maintaining its expansion plans that include entering the Indian market -- where it plans to open its first store this year -- but on the whole is focusing on remodeling stores rather than opening new ones to generate sales, Furlanetto said.
"It's a phase of reflection partly due to the economic situation, to reinforce ourselves on the retail end by focusing on making the stores prettier and bigger," said Furlanetto.
"It's a moment of consolidation rather than aggressive expansion."
The Bologna-based company relies on a distribution network of 1,200 stores where its products are sold -- including 300 Furla-branded stores.
One of several Italian luxury brands considered a candidate for an initial public offering or investment by a private equity firm before turmoil rocked the markets, Furlanetto said the firm had refused several offers to remain a family-owned business.
"We've had everything and more -- the possibility of an IPO,
funds that wanted to invest in us, big brands that wanted to buy us," she said. "We've resisted many siren songs."
(Editing by David Cowell)
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