Italian luxury goods firms controlled by large foreign groups, such as Kering and LVMH, have been performing significantly better than their peers regardless of the type of shareholder structure. The worst performing category were companies controlled by private equity firms, according to a survey carried out by PricewaterhouseCoopers.

According to PwC, on average luxury goods groups had an Ebitda margin of 19.6 percent in 2017 compared with 12.5 percent for firms owned by private equity funds and 30.7 percent for brands controlled by foreign groups.

Meanwhile, companies listed on the stock exchange, with the founding family owning or not a controlling stake, had an Ebidta margin of 18.1 percent and those still privately-owned by the founder or his/her family had a margin of 14.5 percent.

In an interview with the Italian business daily Il Sole 24 Ore, a partner of PwC, Emanuela Pettenò, explained that brands owned by foreign groups generate higher margins because they tend to be positioned as premium brands. Furthermore, the groups that own them create corporate synergies that lead to cost savings while letting the brands carry out their strategies independently.

Pettenò pointed out that the luxury and fashion sector continues to appeal to private equity funds in spite of occasionally disappointing returns. She noted that the industry is difficult to grasp for investors that do not have the skills to manage the brands. Funds that are not specialized “risk not understanding the business and its trends.”

Pettenò indicated that in the near future many companies still in the hands of their founders will be reviewing their shareholder structures, leading to investment opportunities in an industry that remains fragmented.