Bruno Magli and Cesare Paciotti, two well-known Italian brands of shoes in the upper-medium segment of the market, are in financial trouble. The details are sketchy at this stage, due to the holidays in Italy, but it seems that some of their problems stemmed from excessive investments at retail and the insolvency of some of their Italian retail clients.
According to the latest reports, GMI USA Corp., a nine-year-old company led by Stefano Maroni in New York that has taken over the distribution of Bruno Magli in the U.S., is proposing to acquire some of its assets, possibly including the brand name. GMI already has licensing deals with Ben Sherman and True Religion.
Reportedly, about half of Bruno Magli's staff have already lost their jobs and most of the company's 45 remaining employees in Italy are waiting to be placed on temporary or definitive layoffs. They hope to learn more on this subject after a meeting with their unions planned for Aug. 25.
A Swiss investment fund, Da Vinci Invest, took over Bruno Magli from a British investment group half a year ago, as we reported at the time. On July 15, the new owners led the company to apply for insolvency proceedings at the bankruptcy court in Bologna, which has appointed a trustee to come up with a plan to pay down the company's debts within 60 days. They already closed in June two of Bruno Magli's most prestigious stores, on Milan's via Montenapoleone and in Rome's Fiumicino Airport. Another store in Venice may be shut down soon.
Meanwhile, the bankruptcy court of Macerata has accepted a request by Cesare Paciotti to protect his company from its creditors. It has named two receivers who will have to present a plan for the repayment of debts which are reportedly estimated at €30 million.
While Bruno Magli closed its own factory in Bologna a few years ago, Cesare Paciotti employs more than 200 people at its own facilities and subcontracts work to another 1,200 people in the Marche region. Its sales have been declining in the past few years, due to the Italian recession, but the designer was recently quoted as projecting a recovery this year to a level of €100 million.
Most of the growth is expected to take place in the Far East and the Middle East, particularly through the opening of new stores in China. There were ten of them at the beginning of this year.