Italy’s Design Industry Sees Consolidation Amid Uncertain Environment
MILAN — Designer leaders here said they were more focused on organic growth and promoting their brands in key markets, rather than listing their shares on the stock exchange.
At the ninth edition of the Pambianco-Interni Design Summit, organized by the Milan-based consulting and media company, Design Holding chief executive officer Daniel Lalonde reiterated that an initial public offering is not currently in the works.
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“Is the market ready?” Lalonde responded to the moderator, explaining that controlling investors Investindustrial and The Carlyle Group will eventually exit the company and while the aim has been to list their shares, this largely depends on market conditions.
“Our approach is more focused on acquisitions… and creating value within the companies we already own,” Lalonde affirmed.
Molteni Group managing director Marco Piscitelli said the goal is “organic” growth with a focus on the U.S. and Chinese markets. “In 2023 we will have the opening of 26 flagship stores, between China and the United States, with which we will reach a total of 100,” he said, adding that growth in those two markets is “crucial.”
Throughout the summit, which was made available to the public online Thursday, it was clear that 2023 will be a year of stabilization for the furnishings and lighting companies, which posted robust earnings in 2021 and 2022 during the COVID-19 pandemic. For the firms that represent the backbone of the design sector, eyes will be on the global economy as it grapples with high inflation, rising interest rates and the war in Ukraine.
Locally, leaders are dealing with the European Central Bank’s hawkish efforts to curb high inflation. Earlier this month, the ECB raised euro zone borrowing costs to their highest level in 22 years and it is likely to raise rates further next month with no signs of abating in the near term.
Following the news, Luca Solca, senior research analyst, global luxury goods at Bernstein, told WWD that the impact on the design and furnishings sector is a given. “Higher interest rates lead to downward pressure on real estate values and volumes lead to downward pressure on the design and furnishings sector. I don’t think there is much of an escape, to be fair.” Solca added that the market has already experienced price weakness and even more so, a significant decline in transaction volumes.
Alessio Candi, Pambianco’s consulting and M&A director, said he sees headwinds impacting revenues in 2023 and 2024.
“For the top companies, growth is expected to no longer rise in the double digits but probably in single digits, driven more by inflation than by growth in quantities (depending on the reopening of China), but these effects will be seen more in 2024 than in 2023,” Candi said.
Haworth Lifestyle Design CEO Dario Rinero responded to market concerns by saying he has high hopes for Haworth’s Luxury Living business, which it purchased in 2020. The group, which produces for Dolce & Gabbana Casa, Versace Home, Trussardi Casa, Bentley Home, Bugatti home and Luxence Luxury Living, has said that its revenues are being driven by its contract business. It saw revenues rise 30 percent in 2022, forecasting 100 million euros in revenues in 2023.
“We will have another important license by September,” Rinero said, contending that the Luxury Living Group is set apart because of its superior production capabilities and that the firm gives fashion brands a “great sense” and meaning to their brand identity as they enter into the world of furnishings and design.
Looking ahead, leaders pondered the uncertainty of the global market, but agreed that there is still great potential to educate consumers in the U.S. and China about the value of Italian products.
“I see this one as a moment of consolidation. Surely 2024 will be more difficult than 2023 with a new phase on the horizon. I see it as a positive opportunity to embark on new things,” Rinero added, noting that Chinese consumers have the spending power to buy a “20,000-euro couch and they don’t know where to go yet, they don’t know our brands yet.”
Boffi-De Padova CEO Roberto Gavazzi agreed, explaining that following a strong 2021 and 2022 performance, it’s not possible to make any forecasts for 2024.
“There are interesting operating margins in the United States and Asia, perhaps a a little less in Europe. In the meantime, we will try to develop retail even further, to fully understand the potential of e-commerce and to continue to train and enhance human capital, which remains the bedrock of our work,” Gavazzi said.
According to data-gathering, statistics and market insights firm Statista, Italy’s robust furniture market is expected to generate $17.6 billion in revenues in 2023.
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