A.Testoni is taking action to develop its sales in Western Europe, which represents less than one-quarter of its global sales, by focusing on the relatively small wholesale segment of its business. Sales through its own stores still represent about 80 percent of Testoni’s total revenues, which are expected to reach about €50 million this year, and this new strategy and the introduction of more affordable styles are intended to help the group to boost its overall annual sales by 35-40 percent the over the next three years.

In the 1st half of this year, sales already rose 20 percent, driven by a 38 percent increase in women’s footwear.

The Italian company, which was one of the first ones to open its single-brand stores in the late ‘seventies, has raised from 50 to 77 the number of directly operated stores around the world in the last three years, but most of the development has taken place in Eastern Europe and the Far East. Testoni only has five such stores in Western Europe, but it doesn’t want to increase this number, preferring instead to expand its wholesale sales there. It is also ready to evaluate franchising proposals.

In the region, Testoni currently has two DOS in Paris, one in Milan and one in Rome, plus a factory outlet at Serravalle, between Milan and Genoa. Earlier this month the company opened a DOS in Bologna, but it plans to close the Serravalle outlet in 2007. On the other hand the company has about 80 wholesale accounts in Western Europe – a number that should be rapidly increased in the coming months.

Testoni currently has only one sales agent for Western Europe, but wants to build up a team of nine agents to raise its presence in premium multi-brand stores throughout the region to form a network of 250-300 selected clients by the end of 2007. To carry out this program, Testoni hired at the beginning of the year a 38-year-old executive, Mario Conti, as sales director with the task of building up the group’s Western European distribution network.

In another initiative intended to reach this goal, the company will market from next year a new line of shoes for department stores with retail price tags of €250-300 per pair to avoid cannibalization with existing premium products, whose boutique prices range from €350 to €3,000. Order gathering for the new range will start in January for the Fall/Winter 2007/08 collection and volumes are forecast to reach 20,000-30,000 pairs in the first year.

Testoni, which launched a new website earlier this year, has budgeted investments of €1 million in 2007 for the reinforcement of its Western European sales network, to be accompanied by a similar budget for marketing. Conti, who previously accumulated some useful experience by working for two consumer product giants, Unilever and Coca-Cola, says trade marketing efforts will kick off when 80 percent of the targeted distribution network is in place with the products in the stores. Advertising outlays could be doubled from 2008 if the group’s distribution network reaches the desired dimensions by then.

Conti is part of a string of managers who have recently joined the company from outside, in line with a strategy pursued by the family of Carlo Fini, which owns the company, to delegate more responsibilities. Other recent recruits previously gained experience at such companies as Bang & Olufsen, Bulgari, Gucci and Salvatore Ferragamo. Fini remains as chief executive.

Meanwhile, Testoni is building up its presence in North America thanks to partnerships with two large up-market retailers —Saks Fifth Avenue and Neiman Markus — and by opening a new store in the Sherry Netherland Hotel Building on New York’s 5th Avenue, but company executives declined to release any sales figures or targets for that market. In Eastern Europe, the group has eight franchised stores and is sold in 200-250 multi-brand stores. It also has over 50 directly owned stores in Asia.

In China the group has 27 stores and five more should follow in 2007, while in Russia Testoni will open a franchise store in St. Petersburg in November and another one in Moscow at the beginning of 2007.

Known primarily for its exclusive line of men’s dress shoes and leathergoods, with many styles using exotic skins, Testoni still has its own production site in Bologna, where it has its head office. It currently outsources about 10 percent of its output, but it is prepared do more in Italy outside its own factory to meet its sales objectives.