May 26, 2013
Loro Piana rides high through recession in ultra-luxury sector
May 26, 2013
ROME - Italian luxury firm Loro Piana expects double-digit sales growth to continue in 2013 as it expands its niche in the ultra-luxury sector, its chief executive told Reuters on Friday.
Pier Luigi Loro Piana said barring major upsets, sales should grow a little over 10 percent this year, after growth of 13.1 percent to 630 million euros (£538.7 million) in 2012.
Sales grew in Italy in 2012 despite the country's longest recession on record, bolstered by purchases by tourists from emerging countries, but Loro Piana said he expected a recovery in European markets in 2014.
The family-owned group on Friday announced it was extending production of its highest-end products by buying 60 percent of Argentinian company Sanin SA, which has the rights to shear wild vicunas, llama-like animals that live in the Andes mountain range and produce a rare and very soft wool.
Between 6 and 8 thousand kilos of extremely fine vicuna fibre are produced every year, compared with 10 million kilos of cashmere. Loro Piana's vicuna coats sell for about 14,000 euros.
The chief executive said focusing on the highest end of the luxury market had allowed the company to remain buoyant despite depressed consumer spending in key European markets. Overall, company sales have increased just under 50 percent since 2008.
"Being at a very high quality level was the only way for us to survive. We were lucky that this strategy was successful," Loro Piana said.
Continued growth in China echoed results from fashion house Giorgio Armani this week.
However, many listed groups including LVMH, Richemont and Hermes have said sales were slowing as China's crackdown on corruption affected gift giving.
Loro Piana said that Europe remained its strongest market, followed by the United States, China and Russia.
He urged Italy's new government to reduce labour taxes to stimulate growth and ensure competitive energy prices for industry, and said while he considered the euro to be over-valued a return to an Italian currency would not benefit manufacturers.
"To go back to the Lira would be a catastrophe, totally insane. We have a problem, we have to solve the problem inside Europe," Loro Piana said.
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