back on growth path, says CEO Bally
today Jun 15, 2015
Bally, the long-struggling Swiss leather goods maker, is back in growth mode after years of stagnant sales, buoyed by more contemporary designs and solid demand from Japanese and U.S. buyers, its chief executive said.
Frederic de Narp said he aimed to lift Bally's annual sales to 1 billion euros ($1.13 billion) within 5-10 years from its current level of 400 million euros.
The 164-year-old company, one of Europe's biggest shoe makers before World War I, has lacked a clear strategic direction for many years, industry players say.
Between 2008 and 2010 its then-designer Brian Atwood put out perilously high stilettos, which they say took the brand too far away from its Swiss conservative, classical roots.
Then, Michael Herz and Graeme Fidler, who left two years ago, put out retro 1930s style collections that jarred somewhat with the brand's minimalist, sober image.
Narp, in the job for a year-and-a-half, said Pablo Coppola, the designer he chose, was now creating designs that were elegant and in tune with current fashion trends. Coppola previously worked for Dior, Tom Ford and Celine.
"Bally has a fantastic heritage, the only thing we have to do is to exploit it well," said the CEO, who previously worked at jewelers Cartier and Harry Winston.
"We do not sell a sex story, we sell effortless chic," he told Reuters in an interview on the sidelines of the FT Business of Luxury Summit in Monaco.
The privately-held company mainly sells shoes and bags, with one of its best-selling products the Sommet bag, a flare-edged leather bag that starts at around 1,200 euros.
Narp said Bally's sales, which have stagnated for more than four years, were up 3 percent at constant exchange rates since January, in line with rivals such as Italy's Salvatore Ferragamo. The company expects full-year growth to be in the low-to-mid single digits.
Bally is profitable at the underlying level, or in terms of earnings before interest, tax, depreciation and amortization (EBITDA), Narp added.
Japan has been one of its strongest-growing markets this year - with sales up 49 percent at constant exchange rates - and business has been picking up also in the United States where sales rose 7 percent also at constant exchange rates.
The company opened its first flagship in 20 years in October, on London's New Bond Street, and plans to open nine more over the next five years, with the next one on Rodeo Drive in Los Angeles in November and another in Ginza, Tokyo, in 2016.
Narp said he wanted to double Bally's business in the United States and Japan over the next five years.
He said it would take time to turn around Bally, particularly in the current tough environment, with subdued demand in Europe and slower economic growth in China.
Bally has 60 stores in Greater China and makes more than half of its sales to Chinese customers, Narp said.
Now one of his top objectives was to make Bally more appealing to women as they now only made up 30 percent of clientele and he wanted to boost that figure to 50 percent within the next few years.
To raise its profile, Bally also hired super-model Freja Beha Erichsen, who has worked for Chanel and Louis Vuitton, for its advertising campaigns.
Narp said sales from women's products such as handbags, shoes and other small leather goods were up 15 percent at constant exchange rates since the beginning of the year.
He said Bally's top creative and marketing leadership was now based in London because it was easier to attract talent there than in Switzerland.
Luxembourg-based JAB Holdings bought Bally from private equity firm TPG in 2008, a deal that marked its first venture into the fashion and luxury world.
JAB, an investment company with over $39 billion of assets under management, works for the Reimanns - German billionaires who inherited their fortune from soap and detergent maker Reckitt Benckiser.
It controls fashion brand Belstaff, New-York listed cosmetics group Coty, London-quoted shoe maker Jimmy Choo as well as coffee maker Jacobs Douwe Egberts.
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