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Fendi’s Turnaround Plan: More Stores, Products To Build a $500M Brand

Fendi is gunning to become a profitable $500 million fashion house and won’t pin its hopes on a hit handbag, but on a sound business strategy.

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Sidney Toledano

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Michael Burke

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MILAN — Fendi is gunning to become a profitable $500 million fashion house —and won’t pin its hopes on a single hit handbag.

“We’re not asking ourselves every morning when we wake up, ‘How can we duplicate the Baguette?’” said Michael Burke, chief executive officer of Fendi. “It’s not an obsession.”

Instead, Fendi is hinging its fortunes on multiple categories, a stronger emphasis on directly owned retail and the fashion prowess of Karl Lagerfeld — even if the designer occasionally bites the hand that feeds him.

In an exclusive interview, his first since assuming the helm of the money-losing Roman fashion house a year ago, Burke outlined a strategy designed to double the company’s volume and achieve operating profits in the double digits within three to four years. Key elements of the plan include:
  • Capitalizing on footwear and eyewear, both underdeveloped categories.

  • Relaunching the fragrance business next year.

  • Opening about 15 new Fendi stores per year over the next three to four years, including a new Manhattan flagship on Fifth Avenue.
But Burke emphasized that parent LVMH Moët Hennessy Louis Vuitton, which bought Fendi at the height of the luxury acquisitions boom in 1999, is taking the long-term perspective.

“We don’t want a short-term success that next year goes down like a souffle,” Burke said, seated in a spartan conference room at the Fendi showroom here. “We want to build a really healthy business.”

Sidney Toledano, president and ceo of Christian Dior, joined Burke in the interview by conference call from Paris. In May 2003, LVMH chairman Bernard Arnault tapped Toledano to also oversee the Fendi strategy — and he said the company has been the focus of intense reorganization behind the scenes.

“We wanted to be quiet because we needed to really work,” Toledano said. “But the name is fantastic and the know-how of this company is really great.”

The vacuum created by Fendi’s silence on business strategy often has been filled by rumors and speculation of the negative sort.

Most recently, the Italian daily Corriere della Sera published an interview with Lagerfeld in which he complained about a revolving door of managers at Fendi, disorganization within the company and shortcomings in the design department.
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