Salvatore Ferragamo Italia S.p.A.

Via dei Tornabuoni 2
Firenze
I-50123 FI
Italy
Telephone: (+39) 055 33601
Fax: (+39) 055 336021
Web site: http://www.salvatoreferragamo.it

Private Company
Incorporated: 1927
Employees: 700
Sales: EUR584.7 million ($631 million)(2002)
NAIC: 316214 Women's Footwear (except Athletic) Manufacturing; 315233 Women's and Girls' Cut and Sew Dress Manufacturing; 315234 Women's and Girls' Cut and Sew Suit, Coat, Tailored Jacket, and Skirt Manufacturing; 315999 Other Apparel Acces sories and Other Apparel Manufacturing; 316213 Men's Footwear (except Athletic) Manufacturing; 316992 Women's Handbag and Purse Manufacturing

Salvatore Ferragamo S.p.A. has been synonymous with Italian luxury for more than three-quarters of a century. The Florence-based, family-owned company continues to produce the shoes that once earned it the nickname "Shoemaker to the Stars," but also designs, produces, and distributes a full range of men's and women's clothing and accessories. In addition, Ferragamo sells its own branded perfume lines, and, in a partnership with another Italian company, Luxottica, a range of Ferragamo-branded eyeglasses. Nevertheless, shoes remain at the heart of the Ferragamo empire, and, while the company once focused on custom-fitting such famous clients as Audrey Hepburn and Marilyn Monroe (who brought fame to the company's stiletto heels), it now produces a wide range of sizes and shoe widths appealing to a broader, yet still upscale market. Women's and men's footwear represent more than 42 percent of the group's sales of nearly EUR 600 million. Ferragamo's sales are made through a global network of retailers, including most of the world's major department stores, and through the company's own network of nearly 450 retail Ferragamo stores, approximately half of which are directly owned by Ferragamo. The Asian region, especially Japan, accounts for the largest share of the company's sales at 45 percent. North America adds 31 percent to sales, while Europe accounts for 23 percent. Ferragamo also owns French design group Ungaro. Founded by Salvatore Ferragamo, the company remains headed by his widow, Wanda, and their children. Eldest son Ferruccio acts as CEO of the company, which remains 100 percent owned by the Ferragamo family.

Fitting the Walk of Fame in the 1920s

One of 14 children, Salvatore Ferragamo was born in Bonito, near Naples, in 1898. He began an apprenticeship with a Naples shoemaker at the age of 11; two years later, he had set up his own shoe shop in Bonito. A number of Ferragamo's older brothers had traveled to the United States, and, when he was 14 years old, Ferragamo set out to join them.

Ferragamo at first went to Boston, where one of his brothers worked at a large shoe manufacturer using industrialized shoemaking techniques—a far cry from Ferragamo's own commitment to traditional, quality craftsmanship. Ferragamo remained in Boston for nearly a decade, but at the start of the 1920s he decided to move closer to one of his other brothers, who lived in Santa Barbara, California. There, Ferragamo opened his own shoe shop, practicing traditional shoemaking techniques.

Ferragamo soon went to work for the film industry as a designer and maker of boots and shoes. The quality of Ferragamo's costume shoes led actresses and actors to ask him to make them footwear for off-screen as well, and Ferragamo quickly established a reputation among people in the movie business. In order to be in closer proximity to his new clientele, Ferragamo moved his shop to Hollywood, where he opened the Hollywood Boot Shop in 1923.

With customers such as Rudolph Valentino, Douglas Fairbanks, Mary Pickford, and Gloria Swanson, Ferragamo quickly earned the nickname "Shoemaker to the Stars." In the meantime, Ferragamo enrolled at Los Angeles University, where he studied human anatomy, mathematics, and chemical engineering, disciplines which he applied to the creation of his shoe styles. Indeed, much of modern footwear, and especially women's footwear, was to stem from Ferragamo's innovations. These included the open shoe and sandals for women. Over time, Ferragamo amassed a collection of some 300 patents, most, but not all, of which were for his shoes.

Ferragamo's popularity as a shoe designer rose steadily in 1920s, and his customer base spread beyond the acting world. By the middle of the decade, demand had risen beyond Ferragamo's capacity to complete the orders he received. Ferragamo now sought to expand his shop into a full-scale shoemaking business. However, unable to find qualified personnel in the United States, Ferragamo ultimately decided to return to Italy.

In 1927, Ferragamo set up a new business in Florence, a primary center for the Italian shoe industry, where the supply of trained workers was plentiful. While remaining committed to traditional handcrafted shoemaking techniques, Ferragamo was able to adapt them to modern production methods.

Expanding Production in the 1930s

Ferragamo began to establish his name as a preeminent Italian shoe manufacturer in Italy and elsewhere in Europe. Ferragamo's expanded operation also allowed him to continue to supply his loyal customers in the United States. However, following the Wall Street crash of 1929 and the resulting international depression, orders from overseas collapsed. Because Ferragamo's European sales were not yet sufficient to carry the company, he went bankrupt in 1930.

Faced with rebuilding his business, Ferragamo now focused exclusively on the Italian market. His inspired designs and quality craftsmanship quickly brought him a growing customer base, and by the mid-1930s Ferragamo was operating two workshops to supply his customers. In 1936, Ferragamo opened a new shop in Florence's famed Palazzo Spini Feroni.

The late 1930s were marked by a tightening supply of materials, such as leather and metal, that were essential to shoemaking, as the Mussolini-led government turned its attention to rebuilding the country's war machine. In response, Ferragamo began developing shoes based on a variety of other materials, such as felt, metallic threads, and raffia. These materials inspired Ferragamo to create new and innovative designs, and his popularity soared in Italy. A major success came with Ferragamo's inspired use of cork to create the so-called "wedge" heel, thereby overcoming the lack of materials needed to produce traditional heels.

The cork heel attracted customers and remained a company best-seller for years to come. Ferragamo's rising sales now allowed him to put down a down payment on the purchase of the Palazzo Spini Feroni building, which became the company's headquarters in 1938. Ferragamo's fortunes continued to rise despite the outbreak of World War II, and his company now owned the building outright. The 13th century landmark building remained the company's headquarters and later housed the Salvatore Ferragamo Museum.

The years following the end of World War II marked the period of Salvatore Ferragamo's greatest personal success, as his shoe designs became known throughout the world. In 1947, he released the so-called "invisible" sandal. That design received the prestigious Neiman Marcus Award, marking the first time this honor went to a footwear designer. Another significant innovation was Ferragamo's steel-reinforced stiletto heel, which became closely identified with Marilyn Monroe in the 1950s. Other important Ferragamo clients of the period were Sophia Loren, Greta Garbo, and Audrey Hepburn.

By 1950, Ferragamo employed some 700 workers, who produced just 350 handcrafted and for the most part custom-fitted shoes per day. During the 1950s, Ferragamo began mechanizing non-critical areas of the shoemaking process. However, the major part of his shoes remained fashioned by hand.

Toward the end of the 1950s, Ferragamo prepared to introduce a new generation into the family business. Married in 1940, Ferragamo was the father of six children, three boys and three girls. In the late 1950s, the oldest child, daughter Fiamma, joined the company and began learning design and shoemaking from her father.

Salvatore Ferragamo died in 1960, leaving the business to his family. Ferragamo's widow, Wanda, who had previously stayed at home to raise the couple's children, now took the lead of the company and quickly displayed her abilities as a businesswoman. The other Ferragamo children joined the company during the 1960s, each taking responsibility for a particular sphere of operation. Eldest son Ferruccio later took over as CEO, while Fiamma carried on the creative side of the business.

Within a year after her father's death, Fiamma Ferragamo had already debuted her first collection, in London, to great acclaim. She also became something of an ambassador for the company, personally making sales appearances at major clients throughout the world. By 1967, Fiamma was also recognized with the Neiman Marcus Award.

Diversified Luxury Goods Group in the New Century

Over the following decades, Ferragamo modernized its production methods, adding mechanized and automated production lines in order to meet the growing demand for its branded products. Where the company previously made at most 350 pairs of shoes each day, its capacity grew to as high as 11,000 pairs per day. The company shrewdly overcame the difficulty of maintaining its commitment to proper fit by developing an extensive range of sizes and shoe widths, with many sizes offered in up to six different widths.

Company Perspectives:

The values of the current company were translated by its founder Salvatore Ferragamo, who, with his life's experiences, guiding principles, creativity, and legendary success, bequeathed strong and distinctive ideals which were then carried on first by his wife, then by his children, and now with continuity in the third generation.

Ferragamo also adapted to the rapidly changing luxury goods sector. The proliferation of designer lines in the late 1970s shifted the focus of the luxury footwear sector from a small, elite group of buyers to a larger, although still upscale consumer market. Ferragamo responded by diversifying beyond footwear. After introducing an assortment of leather goods, including luggage, the company launched its own line of knit-wear in the 1980s.

In 1980, Ferragamo added its first ready-to-wear clothing collection to complement its footwear, accessories, and knit-wear, enabling the company to promote its "total look." The company, which relied on in-store boutiques in the world's department stores, also aimed to extend its vertical integration into the retail channel. During the 1980s, the company began opening its own stores, and by 1990 operated 18 stores in Italy, Zurich, and London. In the United States, Ferragamo had stores in New York and Palm Beach.

By then, exports represented 75 percent of Ferragamo's sales, while the United States alone accounted for some 48 percent of the group's total revenues. Yet the Far East represented perhaps the fastest-growing market for the company. At just over 11 percent of total sales at the start of the 1990s, the Asian region grew into the company's single largest market, accounting for more than 45 percent of sales by the opening years of the 21st century. Among Asian markets, Japan was Ferragamo's most lucrative.

By the mid-1990s, Ferragamo, which had weathered the worst of the recession of the early 1990s, prepared for further growth. As Ferruccio Ferragamo explained to WWD, "When you are confident in what you do, then a crisis is a moment of opportunity—shop space costs less to rent, supplies cost less, and new structures are cheaper to create."

Ferragamo's confidence allowed it to continue building up its retail network through the 1990s. By 2003, the company boasted more than 200 stores under its direct control and over 250 franchise operations in Asian markets. The company also rolled out its own outlet store format during the decade. By 1993, the company's sales had grown to more than $200 million worldwide.

Although hurt by the death of Fiamma Ferragamo in 1998, the company maintained its steady growth rate. This was aided in part by the group's first acquisition—that of majority control of the Paris-based fashion house of designer Emanuel Ungaro. The addition helped boost Ferragamo's presence in the ready-to-wear sector. That acquisition also gave the company its first introduction to the fragrance and beauty products market.

In the late 1990s, Ferragamo departed from its tradition of controlling its production. In 1998, the company signed a licensing deal with dominant Italian eyeglass manufacturer Luxottica to release a Ferragamo-branded line of eyeglass frames. The following year, the group debuted its own Ferragamo-branded perfume, Ferragamo pour Femme, produced under license by Bulgari SpA. The company also released a men's fragrance.

Two years later, however, Ferragamo ended the production license and instead brought its fragrance and beauty products operations in-house under subsidiary Ferragamo Parfums SA. Development began on a new line of fragrance and bath and beauty products which debuted in October 2003 under the name Incanta. In the meantime, Ferragamo continued its expansion, opening new flagship stores in New York and Tokyo in 2003. Even as it pursued its drive to become a leader in the global luxury fashion sector, Salvatore Ferragamo S.p.A. remained committed to the tradition of quality and innovation initiated by its founder more than 75 years before.

Principal Subsidiaries

Ferragamo Finanziaria SpA; Ferragamo Parfums s.p.a.; Palazzo Feroni Finanziaria SpA; Ungaro SA; ZeFer S.p.a. (50%).

Principal Competitors

LVMH Moet Hennessy Louis Vuitton S.A.; Prada Retail S.p.A.; C and J Clark Ltd.; Salamander AG; Donna Karan International Inc.; Gucci Logistica S.p.A.

Key Dates:

1911:: Apprenticed to a Naples shoemaker, Salvatore Ferragamo sets up his own shoe shop in Bonito.
1912:: Ferragamo emigrates to the United States and begins working for a shoe manufacturer in Boston.
1920:: Ferragamo moves to California, setting up his own shop in Santa Barbara.
1923:: Ferragamo moves to Hollywood and opens the Hollywood Boot Shop, becoming known as the "Shoemaker to the Stars."
1929:: Ferragamo declares bankruptcy; rebuilds his business, and focuses on the Italian market.
1947:: Ferragamo wins Neiman Marcus Award for his "invisible" shoe design.
1959:: Ferragamo's daughter Fiamma joins the company and begins training under her father.
1961:: Fiamma Ferragamo presents her first collection in London.
1967:: Fiamma Ferragamo wins Neiman Marcus Award.
1980:: The company launches its first ready-to-wear clothing collection.
1996:: Majority control of French design house Emanuel Ungaro is acquired.
2003:: The company produces its first perfume, Incanta, and opens flagship stores in New York and Tokyo.

Salvatore Ferragamo Italia S.p.A

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