MILAN (AP) — Loro Piana, an Italian luxury textiles maker and fashion house, is so particular about its materials that it bought its own natural reserve in the mountains of Peru to protect the vicuna, an endangered species that yields a precious wool.
Such master of the supply chain, which brings it to Myanmar to extract minuscule fibers from the lotus flower and Mongolia for baby cashmere, has earned it customers willing to pay $20,000 for a vicuna coat. It also caught the attention of the French luxury conglomerate LVMH, which this summer agreed to pay 2 billion euros ($2.7 billion) for an 80 percent stake in the six-generation family-run company.
From Loro Piana's side, the deal was a bid for continuity by a family-run company facing a generational shift while reaching for scale for future growth. "What we were concerned about is that the company would be able to develop, and we believe that through the collaboration with the LVMH group this goal can be easily achieved," Pier Luigi Loro Piana, the chairman and co-CEO of his company, said in a recent interview. He and his brother Sergio have remained at the helm for an unspecified transition period.
The company, based in the northern Italian region of Piedmont, is already one of the world's largest producers of luxury textiles, with 4.5 million meters in 2012. And it has had double-digit growth — from 478 million euros in revenues in 2010 to 627 million euros last year.
But the deal will guarantee a solid level of captive business, as Loro Piana's 250 clients include brands already owned by LVMH, Pier Luigi said. Italy's fashion industry is comprised primarily of small family-run companies, and the recession has hurt those who don't make most of their sales abroad. The Italian fashion world has likewise been reluctant to aggregate into conglomerates that can better weather shifting global crises — leaving fashion houses trying to secure their future to look primarily abroad for solutions.
Loro Piana's new owner, whose full name is LVMH Moet Hennessy Louis Vuitton SA, already has a portfolio of Italian firms acquired over the years, including the Fendi fashion house and Bulgari jewelers. Its rival conglomerate, Kering, is also French and has such brands as Gucci and Bottega Veneta. The two have been among the most successful buyers of Italian fashion houses thanks to an approach that favors aggregating businesses that complement each other.
Not all fashion transitions have been smooth. Valentino and Gianfranco Ferre, for example, have experienced some turbulence, with multiple owners accompanying changes in the creative direction in the void left by the eponymous owners.
Pier Luigi Loro Piana said he was pleasantly surprised by LVMH CEO Bernard Arnault's interest in the company's supply chain control and, in particular, their efforts to preserve the vicuna. The company established a reserve in Peru for vicuna, camelids that were almost poached to extinction in the 1960s, doubling their numbers to 2,000 over five years. This year, Loro Piana bought a majority stake in a company in Argentina that has 6,000 free-range vicunas.
"I was pleasantly surprised by how much interest Mr. Arnault and his collaborators took in our capacity to control the entire chain," Loro Piana said. "I was a little worried about this but instead I have seen a strong interest."
A commitment to those projects, he said, will help guarantee Loro Piana's future — both as a source of jobs in Italy and profits for its French owners. It's a formula that is finding acceptance in the Italian fashion world.
"We are a little unhappy when Italian companies are bought by outsiders," Milan fashion chamber president Mario Boselli said. "But it must be said if we look at the history of Italian companies that have been bought by the two French groups, they are stories of cohesion and success that we can only acknowledge positively.
"Chapeau," he said, using the French expression for "Hats off."