L Catterton Adds Italian Luxury Lifestyle Brand Etro to Growing List

After nearly 55 years as a family-owned business, Etro – the Italian luxury brand known for its paisley pattern on rich textiles inspired by travels on the Silk Road – is looking outside the family to push the line forward. mark in the 21^stcentury. On Sunday, L Catterton issued a statement announcing its acquisition of the brand, thereby making it majority shareholders. According to Reuters, sources close to the deal said L Catterton would get 60% of the company in a deal expected to be finalized by the end of the year. The deal values ​​Etro at around € 500m, the sources said, confirming reports from Italian newspapers La Repubblica and Il Sole 24 Ore.

Etro has remained not only a family business, but also a tight-knit company. Founded in 1968 as a textile company by Gerolamo Etro, his four children Kean, Jacopo, Veronica and Ippolito, have key roles in the management and creative aspects of the brand. Until that deal, Etro stood alongside Ferragamo as one of the last family-owned luxury homes. , were taken over by other groups, respectively Kering and Capri Holdings Ltd. Gerolamo will become chairman, and the remaining four siblings will remain shareholders with a 40 percent stake.

From L Catterton’s perspective, given his list of more than 200 investments since 1989 and a fund valued at $ 28 billion, it fits a model of acquisitions with a strong name and brand DNA.

According to Robert Burke, retail consultant and director of Robert Burke and Associates, Etro ticks those boxes. “It’s a brand with huge potential,†he said, noting its multi-category items for men, women, accessories, home, fragrances and gifts. “It’s very identifiable and one of the few brands to have stayed true to its vision,” he added, noting the lack of distribution or branch lines or brand collaborations.

He also considers the family business approach to be an important asset. “You would be hard pressed to have a more family run organization and that is part of the appeal. There is a face that you can recognize associated with it. He praised their retail expertise which has resulted in real estate acquisitions such as the Madison Avenue building that houses the New York store and offices.

Nonetheless, he considers L Catterton’s support to invest properly in the e-commerce platform as a necessary boost. “It is so essential to invest and have a strong online presence. Today, markets have accelerated so quickly – especially with the importance of China, the Middle East, Mexico and Brazil – that it is not enough to be numerically adequate â€, a- he suggested.

Some of the most important luxury brands in L Catterton’s portfolio include Baccarat, Piazza Sempione, Giuseppe Zanotti, Gentle Monster and John Hardy. In recent months, they have acquired Birkenstock, which has skewed its product up with designer collaborations. Rihanna’s hugely popular and democratic lingerie brand Savage X Fenty was added to the list earlier this year. In 2018, they acquired Jessica Alba’s own skin care brand, The Honest Co.

At the mass level, they claim brands like PF Chang’s China Bistro Inc., Wolfgang Puck Food Company, Inc., Anthony’s Coal Fired Pizza and Wings, Build-A-Bear Workshop. Fitness, medical and technological services such as Classpass and Flash Parking also occupy a considerable place in the portfolio. There is speculation that L Catterton is also considering going public, as reported by Reuters.

Between luxury and mass brands are names whose perceived luxury has evolved since the investment or sale of the idea of ​​luxury at ambitious prices. The former are companies such as Equinox and Bliss which were once exclusive high-end companies geared to a larger population. The latter is reminiscent of brands such as Restoration Hardware, Ganni and SMCP, which includes French fashion brands Sandro, Maje, Claudie Pierlot, De Fursac which sell trendy clothes at contemporary prices and have opened outlets in almost every corners. from Paris. The look is more luxurious than the actual product but matches the consumer’s desire.

This latter group mentality could cause concern for Etro’s luxury legacy. In some cases, according to a source close to an L Catterton investment, a brand’s luxury status can be compromised as artisan products are reproduced in quantity and sold through mass stores such as Costco and retail programs. purchase televisions such as QVC. The perception of average consumers is luxury, but in fact the end product has been watered down. Over time, this denigrates a brand.

According to Statista, a report released in June 2020 showed consecutive years of losses starting from 2016 to 2018; in total, the net loss for these years was 31.2 million euros. In the statement issued by L Catterton, Etro will leverage “L Catterton’s” deep investment expertise, category knowledge, consumer knowledge and strategic relationship with LVMH, Etro will be on the verge of a significant growth “. Specific goals include growing the customer base by reaching a younger generation, improving its digital presence and driving global expansion, focusing on significant opportunities in Asia. With an aging founder and significant losses, now is certainly a good time to find a partner to guide the next phase, and L Catterton is contributing the cash to do so.