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Stefanel SpA

Stefanel SpA

Via Postumia 85
Ponte di Piave
I-31047 TV
Italy
Telephone:
+39 0422 8191
Fax:
+39 0422 8193
Web site: http://www.stefanel.it

Public Company
Incorporated: 1959 as Maglificio Piave
Employees: 1,250
Sales: EUR 649 million ($800 million) (2003)
Stock Exchanges: Borsa Italiana
Ticker Symbol: STEF
NAIC: 315232 Women's and Girls' Cut and Sew Blouse and Shirt Manufacturing; 315233 Women's and Girls' Cut and Sew Dress Manufacturing; 315234 Women's and Girls' Cut and Sew Suit, Coat, Tailored Jacket, and Skirt Manufacturing; 315999 Other Apparel Accessories and Other Apparel Manufacturing

Stefanel SpA is an Italian clothing designer, manufacturer, and retailer, producing fashions for the men's and women's segments under its own Stefanel and Stef in Time brands, as well as clothing under license for French design duo Marithé and François Girbaud, including their jeans collection and the SPQRCITY sportswear collection. The company's Interfashion subsidiary produces its licensed clothing. Stefanel's sales come primarily through its international retail network of both company-owned and franchised stores, operating under the Stefanel name and, in Germany, under subsidiary Hallhuber's name. Altogether there are some 750 stores under the Stefanel umbrella, including outlets throughout Europe, and in North America, the Middle East, and Asia. Italy, however, remains the group's primary retail and clothing market, accounting for more than half of its stores. Hard-pressed by strong competition at the dawn of the 21st century, including from Italian rivals Benetton and Diesel, Stefanel has diversified its operations. In 2002, the company acquired a 50 percent stake (together with partner and Italian hard-discounter PAM) in the Nuance Group, the world's leading operator of retail duty-free stores with nearly 400 outlets worldwide. Nuance now accounts for more than 70 percent of Stefanel's revenues, which neared EUR 650 million ($800 million) in 2003. Stefanel, listed on the Borsa Italiana since the mid-1980s, remains controlled by the Stefanel family, under the leadership of Guiseppe Stefanel, son of the company's founder. In October 2003, Guiseppe Stefanel raised his shareholding position in the company to more than 57.5 percent; the company's other major shareholder is Delta Erre, with 27.5 percent.

Village Origins in the 1950s

The Treviso region near Venice became the home of one of Italy'sand the world'smost important fashion and design centers, providing the birthplace for such internationally known brand names as Benetton and Diesel. Yet Stefanel was one of the first of the design houses to come from the region.

Carlo Stefanel was born in the village of Ponte di Piave in 1925 and began working at his aunt's spinning mill, in Oderzo, at a young age. Following World War II, Stefanel became determined to go into business for himself. As he recalled in 1986: "I had lots of ideas and I was able to start out on my own thanks to the faith and financial support of a friend whom I will never thank enough."

Stefanel started out producing his own wool blend, which he sold at stalls in a number of local marketplaces. At first, Stefanel transported his goods by bicycle. Before long, his growing business enabled him to buy a small car, which he converted into a truck.

Stefanel continued to build his wool business through the 1950s. Yet Stefanel was eager to move on to the next phase, that of the production of textiles and clothing designs. At last, in 1959, he had the opportunity to buy four knitting machines, which he installed in his home in Oderzo. Stefanel founded his own company, Maglificio Piave, and began producing knitwear for the wholesale market.

The company grew strongly through the 1960s, yet remained exclusively a supplier to wholesalers. The late 1960s and especially the 1970s marked a new period of designer and brand name consciousness, giving rise to a new breed of textile groups in Italy.

By then, Stefanel had been joined by son Guiseppe, born in 1952. At the end of the 1960s, Guiseppe Stefanel had begun working for the company, taking responsibility for its production of yarn and textiles. During the 1970s, however, the younger Stefanel recognized the potential for launching the company's own clothing designsunder its own brand name.

The company began producing a range of knitwear in the mid-1970s, selling its clothing collections directly to other retailers. The Stefanel-branded line quickly captured the interest of Italian consumers, and before the end of the decade the company began to enjoy national recognition and success.

International Retailing Empire in the 1980s

Guiseppe Stefanel took over as company managing director in 1979 in order to lead it into the next phase in its development. In that year, the company began developing its own retail concept, originally along a franchise model. The initial success of the retail concept encouraged the company to begin opening a number of stores under its direct control, starting with a shop in Siena in 1980.

Adopting a new corporate name, Stefanel, the company began a period of rapid expansion. By 1982, the company made the bold decision to expand beyond Italy, opening its first international store in Paris that year. Stefanel posted impressive growth into the middle of the decade, inspired in part by its decision in 1983 to begin selling clothing exclusively through its own rapidly growing retail network.

By the middle of the 1980s, that network had grown to nearly 800 company-owned and franchised stores throughout the world. Fueling the company's growth was its public offering in 1986. In that year, the company's sales topped the equivalent of $128 million. Just two years later, Stefanel's revenues had already passed the $200 million mark. Italy remained the company's primary market, backed by a network of more than 550 stores by the end of the decade. With little room for further growth at home, however, the company stepped up expansion of its international network.

Guiseppe Stefanel became company chairman and CEO following his father's death in 1987. By then, the company had begun eyeing a new and potentially huge marketNorth America, especially the United States. The company opened its first franchised stores in New York and Bermuda that year, and announced its intention to add another 40 to 60 storeswith ultimate plans to boost its North American presence to as many as 200 stores by the 1990s.

Yet success in the United States proved elusive for the company. By 1989, it had succeeded in opening only 18 stores in the United States, with a further eight operating in Canada. Stefanel had been unable to position itself as a true brand name in the United States, and was forced to reduce its objectives in the U.S. market, lowering its sights to just 100 stores. Even this goal proved optimisticby 1992, the company's presence in the United States had shrunk back to just four stores.

Despite its difficulties in North America, Stefanel's growth remained impressive into the start of the 1990s. By the beginning of that decade, Stefanel boasted more than 1,100 franchise boutiques in its retail network, producing sales of nearly $400 million. Among the company's successes was winning the right to form a joint venture with the city of Leningrad (later renamed Saint Petersburg) to open two stores, and operate two factories, supplied by textiles from Stefanel's home base, starting from 1988. In 1989, the company moved into Japan, forming a joint venture with Onward Kashiyama. That business grew rapidly, topping 100 stores in the early 1990s, including 40 stores in Japan, and stores in South Korea, Taiwan, and China.

Finding New Focus for the New Century

Stefanel, which had concentrated its efforts on its core midrange knitwear line, now began seeking to extend the range of its retail offering. In 1989 the company expanded its manufacturing base through the acquisition of Compagnia Finanziaria Moda, which produced clothing under license, including the clothing manufacturing license for the Converse All-Star brand. With its expanded production capacity, Stefanel began looking for new licensing partners.

In 1990 it entered two licensing partnerships. The first was with Italian designer Romeo Gigli, with an agreement to launch and distribute the new mid-priced G Gigli collection, inspired by the designer's ready-to-wear clothing. The two companies strengthened their relationship in 1992, forming a joint venture company to take over design and production of the G Gigli line. In the meantime, Stefanel was enjoying success through another design partnership, formed with France's Marithé and François Girbaud, designers of a successful jeans line, as well as their own ready-to-wear collection. The licensing deal gave Stefanel the European retailing rights to Girbaud jeans and other clothing.

Stefanel's licensing deals came as part of an overall effort to drive its retail offering into a higher-priced categorya strategy that came as much in reaction to the huge success then being enjoyed by Italian rivals Benetton and Diesel, among others. Yet Stefanel was outpaced by these groups, which had captured international attention through bold advertising campaigns.

Company Perspectives:

As with people, companies do not grow because they want to but because they know how to express their potential and creative resources.

Virtually limitless resources that should be continually explored, bravely and confidently. Only this will give us the ability to face and overcome changes, to find the right answers to new questions, to live in tune with the times.

By 1995, with an international network approaching 1,500 stores, Stefanel appeared to have run out of steam. In that year, the company slipped into the red. Losses continued into 1996, despite the company's effort to cut costs and refocus its retail network. As part of that process, the company slashed the number of shops, dropping some 500 stores. Many of these were smaller stores, closed in favor of a new and far larger "superstore" concept. The company also attempted to broaden its consumer base by introducing a new Stefanel Kids collection.

Stefanel also turned to a new partner to restore its momentum. In 1995, the company reached an agreement with American designer Calvin Klein, then making an attempt to enter the European market. The two companies agreed to form a joint venture, SKY Co., held at 73 percent by Stefanel, to open as many as 150 CK stores in Europe by the end of the decade.

Yet CK failed to inspire European shoppers. By the end of the decade, the costs of developing the CK network had begun to weigh heavily on Stefanel, which once again slipped into losses. As a result, the company abandoned the CK partnership. At the same time, it ended its struggling Stefanel Kids line.

Stefanel was once again faced with finding new growth avenues. The company now began targeting acquisitions of existing businesses as a means forward. In 2000, the company turned to Germany, paying $17.5 million to acquire that country's Hallhuber group. Hallhuber operated 44 stores throughout the country, selling its own brands, as well as clothing from Marithé and François Girbaud and Calvin Klein. The company expected to build up its presence in Germany, both through its own 23 Stefanel stores in that country, and through the expansion of the Hallhuber chain.

Stefanel continued to seek other expansion possibilities. The next opportunity came in 2002, when the company was offered an option to acquire 50 percent of the Nuance Group, then being acquired by Italian hard-discounter PAM from Swissair. Nuance had been formed in 1992 through the combination of the duty-free business of Swissair and Crossair. By the beginning of the 2000s, after a number of acquisitions, Nuance had emerged as the worldwide leader in the retail duty-free market, with nearly 400 shops. The addition of its Nuance stake transformed Stefanel's balance sheet, tripling its revenues. Nuance also gave Stefanel a new outlet for its own clothing fashions. Leading the company's new charge was Guiseppe Stefanel, who, after delegating direction in the 1990s, decided once again to oversee the company's day-to-day operations in order to restore its former glory. As part of that effort, Stefanel increased his own direct ownership in the company, stepping up his shareholding to more than 57.5 percent in October 2003. Stefanel hoped to become once again one of Italy's fastest-growing design and retail groups in the 2000s.

Principal Subsidiaries

Fordan S.L. (Spain); Genfico Holding B.V. (Netherlands); Hallhuber GmbH (Germany); Interfashion S.p.A.; Interpool S.p.A.; Lara Stefanel S.a.s. (France); Nuance Group; Retail S.r.l.; S.T.ARIE' Lda (Portugal); Sfk Ltd. (Korea); Stefanel Fashion Turkey A.S.; Stefanel GmbH (Germany); Stefanel International Holding N.V. (Netherlands); Stefanel Romania S.r.l.; Stefanel Universal S.r.l. (Romania); Stefburg Mode GmbH (Austria); Stefpraha S.r.o. (Czech Republic); Stout S.p.A.; Swiss Factory Outlet S.A.; Tindareo S.r.l.; Victorian S.r.l.

Key Dates:

1947:
Carlo Stefanel begins producing and selling wool and fabrics in local markets in the Treviso region of Italy.
1959:
Stefanel buys four knitting machines and establishes his own clothing company, Maglifico Piave, supplying wholesalers in Italy and Europe.
1970s:
Joined by son Guiseppe, Stefanel begins designing and selling clothing under the Stefanel brand directly to retailers.
1979:
Stefanel develops its own retail store concept and begins franchise operations.
1980:
The first company-owned store is opened in Siena; the company changes its name to Stefanel.
1982:
The first international Stefanel store opens in Paris.
1983:
Stefanel decides to restrict sales to its own retail network.
1987:
Stefanel enters the North American market with stores in New York and Bermuda; by then, the company already operates 800 stores.
1989:
Stefanel forms a joint venture with Onward Kashiyama to open stores in Japan, South Korea, Taiwan, and China; the company acquires Compagnia Finanziaria Moda to begin producing clothing under license.
1990:
The company acquires licenses for Marithé and François Girbaud jeans; a joint venture is formed to launch the new mid-range G Gigli collection in partnership with Romeo Gigli.
1995:
Stefanel forms a joint venture with Calvin Klein to develop the CK retail chain in Europe.
2000:
The CK joint venture is abandoned; the company acquires Germany's Hallhuber.
2002:
Stefanel acquires 50 percent of the Nuance Group, which triples the company's revenues.
2003:
Guiseppe Stefanel boosts his stake in the company past 57 percent and begins efforts to revitalize the Stefanel brand.

Principal Competitors

Marzotto S.p.A.; Cortefiel S.A.; ESCADA AG; Quiksilver Inc.; Benetton SpA; Diesel S.p.A.

Further Reading

Conti, Samantha, "Stefanel's Booster Shot," WWD, August 26, 1997, p. S54.

Galbraith, Robert, "Life in the Global Fast Lane," International Herald Tribune, September 29, 2001, p. 13.

"Guiseppe Stefanel Ups Stake in Family Firm to 57.2%," FWN Select, October 15, 2003.

Forden, Sara Gay, "Restructuring and Cutting Costs Return Stephanel to Profitability," WWD, March 18, 1998, p. 18.

"Stefanel Buys Hallhuber Chain," WWD, March 22, 2000, p. 19.

"Stefanel to Purchase 50% Nuance Stake," Duty Free News International, May 15, 2002, p. 5.

M.L. Cohen

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Stefanel Spa

STEFANEL SPA

Italian sportswear manufacturer and retailer

Formed: in Treviso, 1959, by Carlo Stefanel (1925-87); son Giuseppe joined firm, 1970s. Company History: Signed licensing agreements with Romeo Gigli, the Girbauds, Peter Handley and others; company went public; announced joint venture with Calvin Klein, 1995; formed K Service SpA and SKY Company SpA with Klein, 1996; opened first CK store, Milan, 1997; signed with Joyce Ma to license apparel in Hong Kong, 1997; expansion planned for the U.S., 2001-02. Company Address: 85 via Postumia, 31047 Ponte di Piave, Treviso, Italy.

Publications

On STEFANEL:

Articles

"Knitting Patterns," in the Economist, 3 October 1987.

annon, Lisa, "Stefanel's Fantasy Trip," in WWD, 13 March 1992.

Ozzard, Janet, "Stefanel Deal Will Put CK Stores in Europe," in WWD, 20 December 1995.

"Restructuring Puts Stefanel in Red," in WWD, 18 March 1996.

"Stefanel Loses $12.6M in Half," in WWD, 3 October 1996.

Forden, Sara Gay, "Restructuring and Cuttine Costs Return Stefanel to Profitability," in WWD, 18 March 1998.

***

Stefanel is one of Italy's largest fashion companies, manufacturing young, sporty, wearable separates and knitwear for the young menswear and womenswear market. Sold in shops worldwide, Stefanel clothing is synonymous with good design in quality fabrics, as well its licensing agreements and a joint venture with Calvin Klein.

The company began in 1959 as a manufacturer of knitwear in Treviso, Italy. The brainchild of Carlo Stefanel, it quickly established a reputation for lively color and quality. Carlo's son Giuseppe Stefanel entered the business in the mid-1970s, with exciting plans for expansion into the broader fashion market of casual clothing, sportswear, jeans, and ready-to-wear. Through franchising, Stefanel developed a competitive distribution system that resulted in a steady growth in international markets, particularly in the Far East and Europe. Stefanel's development strategy has supported distribution growth by introducing carefully targeted production policies within the textile and clothing sector, constantly widening the breadth of product ranges.

Knitwear still plays a dominant role in Stefanel collections. For both menswear and womenswear the look is unisex, homespun, and traditional. Fair Isles, jacquards, stripes and checks are incorporated into cozy, easy shapes and restyled into modern, young looks. For evening there are slinky gold, ribbed knits and crochet designs teamed with black drainpipes and silky white blouses for a dressed-up look. Pioneer-style denims, chambray, tartans, and tiny paisley prints are the major woven fabrics used in oversize shirts, casual shirtwaist dresses, simple jackets, and wrap over minis with fringed hems. Cuban style jackets in heavy wool coating, teamed with fisherman jerseys, can give a nautical feel to the range.

Stefanel boutiques mix high-tech with traditional in their interiors. Simple wood floors and furniture are mixed with chrome and glass to create a spacious, modernistic shopping environment. The clothing is merchandised in a logical, easy way with garments arranged in color coordinated sections making it simple for the customer to put together an outfit. Such retail outlets were sprinkled throughout the UK, including its first shops in Ireland in the 1993. Stefanel also opened stores in major cities in China, the first consumer goods manufacturer to do so.

In the 1990s the firm experienced growth and a much higher profile. In 1995 Stefanel and Calvin Klein agreed to a joint venture to manufacture and distribute the popular CK bridge lines. The agreement further called for opening CK stores across Europe and in the Middle East, for Stefanel to acquire a production facility exclusively for CK apparel, and the formation of two new companiesK Service SpA (wholly-owned by Stefanel for manufacturing) and SKY Company SpA (73-percent owned by Stefanel, the remainder to Klein, for distribution). The glow from the Klein deal dimmed quickly, however, when Stefanel experienced its first ever losses in 1995 and 1996, due mostly to restructuring its worldwide operations. Then the following year top officials of the firm were under investigation by Italian authorities for fiscal fraud and falsifying documents, though charges had yet to filed.

Stefanel and Klein opened their first CK store in Milan in early 1997, and the former finally reaped the benefits of its reorganization and debt reduction of the last two years. For 1997 Stefanel was back in the black and the Klein venture was beginning to pay off. Stefanel then turned its attention to expansion outside Europe, namely in the U.S. where operated just a few stores. Guiseppe Stefanel has carried on the tradition his father began almost 50 years ago, and their firm is one of the few remaining independent fashion empires in Italy and beyond.

Kevin Almond;

updated by Owen James

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