Brioni to open shop in Baku

Brioni plans to open its first Indian store and sell $7,800 mink-trimmed cashmere sweaters, according to Andrea Perrone, one of three new co-chief executive officers. Orders for fall-winter 2007 rose at least 10 percent, he said, matching growth in 2006, when sales reached 180 million euros ($232 million).

"The potential is tremendous," Perrone, 36, said in a Jan. 27 interview in the Swiss resort of St. Moritz, where the Penne, Italy-based company sponsored a snow polo competition for fur-clad spectators. "We can see this from the demand we're experiencing. The family wants to guide the business."

Brioni replaced former Chief Executive Officer Umberto Angeloni with a team of family managers. The label built its reputation with handmade suits for Clark Gable and Cary Grant, and rushed $6,000 versions of the tuxedo worn by Daniel Craig's Bond in "Casino Royale" to stores this month.

"Every man wants to feel like James Bond," Antonella De Simone, co-CEO and head of marketing, said in St. Moritz.

Perrone, a descendant of co-founder Gaetano Savini and head of strategy, forecast "record" profit for 2006. Earnings before interest and taxes were 15.3 million euros in 2005.

Angeloni, unhappy about leaving the top job in July after 16 years, retains his board seat. He's also married to Antonella de Simone's sister Gabriella, and the couple controls 17 percent of Brioni's equity. The De Simones are descended from the company's other co-founder, Nazareno Fonticoli.

Perrone, Antonella de Simone and the third co-CEO, finance chief Antonio Bianchini, aren't opening Brioni-owned stores fast enough and should focus on building the unprofitable women's wear line, Angeloni says.

The dismissal "was the face of envy," said Angeloni, 54. "They have no handle on the business. It's hardly an exciting expansion plan. I was too powerful, too glamorous and too much of a leader." He said he's not suing the company or his three successors, who control about 15 percent of the equity.

Under Angeloni, the company started dressing Bond in 1995, introduced the women's collection, which has annual sales of about 12 million euros, and proposed developing the brand's namesake island of Brioni in Croatia into a resort.

The ouster was a "dramatic change," said Carlo Pambianco, a Milan-based consultant. "It's a delicate transition. Brioni needs to compete internationally, and competition is rising."

Giorgio Armani SpA and Jil Sander are offering custom-made garments to compete with Brioni's off-the-rack suits, which cost an average of $5,000 and take 20 hours to make.

Brioni, founded 62 years ago, is dwarfed by Hugo Boss AG and Ermenegildo Zegna SpA, which have annual sales of more than 1.3 billion euros and 700 million euros respectively.

The company will open seven Brioni shops this year, including a directly owned store in Bal Harbour, Florida, up from three in 2006. Six franchised outlets will open, from Mumbai to St. Petersburg, Russia and Azerbaijan's capital, Baku.

"It is essential for us to see the wide-open prospects for growth," Perrone said at the polo competition, co-sponsored with jeweler Cartier and Maybach, a luxury automaker.

The label currently derives about 20 percent of its sales through the 25 stores it owns, and has 13 more franchised boutiques. Boss has more than 1,000 stores, and Zegna has 500. The other 80 percent of Brioni's revenue consists of sales through department stores or specialty shops.

"Brioni is outperforming the rest of the luxury market, which is growing at about 9 percent," said Armando Branchini, vice-president of Intercorporate, a Milan-based consulting company. "Brioni used to be bought by older men with a wide girth. Now its clients are predominantly men between 35 and 45 who work out."

Branchini expects Brioni will report 2006 earnings before interest and tax of as much as 20 million euros, an increase of 31 percent. Perrone wouldn't disclose an exact profit forecast.

Brioni isn't for sale, Perrone said. Fashion companies and private-equity firms have expressed interest, he said, and the family may sell a minority stake from 2008 to finance expansion.

As for women's wear, "we need to start seeing results, otherwise it doesn't make sense to continue," he said.

Jason Basmajian, creative director of ST Dupont, will spearhead Brioni's sweaters, jackets and 40,000-euro coats lined with chinchilla thread, aimed at customers under the age of 40 looking for casual clothing.

Under Angeloni's tenure, sales grew about 12 percent a year. That outpaced the average rate of 6.4 percent between 1994 and 2004 for the overall luxury-goods market, according to data published by Bain & Co.

"We are very grateful to Angeloni for all that he did," Perrone said. "Now there is a new generation." Bloomberg