Sep 8, 2013
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Italy's Morellato not for sale, eyes other domestic brands

Sep 8, 2013

VICENZA, Italy - Italian jewellery and watch maker Morellato Group is not for sale and hopes to add other domestic brands to its portfolio, chief executive Massimo Carraro said.

The global financial crisis, which sapped consumer demand for luxury goods and dried up finance, has turned many Italian jewellers into targets or put some out of business altogether.

"We are not interested in selling. We see our role as that of an aggregator of brands that have a strong 'Made in Italy' identity," Carraro told Reuters in a phone interview on the sidelines of the VicenzaORO jewellery trade fair.

Italy's jewellery manufacturing sector is very fragmented, made up of some 9,000, mostly small and family-owned firms. Both small and big players have become the target of buyers, mainly from abroad, looking for long-term high-value brands.

Morellato, now owned by Carraro and his brother Marco, began in 1930 as a maker of watch straps, but grew into a leading watch and jewellery maker thanks to a string of acquisitions. Today, the group is Italy's largest all Italian-owned jeweller.

One recent buy was that of silver brand Pianegonda.

"Pianegonda is an example of a brand which has suffered during the crisis and which we bought to give it a domestic and international perspective," Carraro said.

"Our strategy focuses on the brands, not on price. It's not about growing in size or buying companies which may be cheap at the moment. It's about finding projects that offer a value at an international scale."

Jewellers like Morellato are pinning their future on a boutique business model to market the 'Made in Italy' brand, focusing on high-end design, innovation and craftsmanship to fight off competition from mass-market producers.

Morellato's focus markets are Europe, the Middle East and Asia, with a particular concentration on China.

"We have 180 sales points in China by now and we plan to grow there organically," Carrara said.

Forty percent of the group's revenue come from its exports and the company hopes to increase that to 50 percent in the future.

Morellato, a maker of 'accessible luxury' jewellery and watches under its own brands and under licence for fashion groups such as Just Cavalli or Miss Sixty, has long used non-precious metals and other materials in its designs.

"Now everybody is doing that, but we've been on it for 15 years and it's definitely paid off," he said.

The jeweller, which had previously said it could float the company from 2012, is holding off on a listing until markets stabilise, Carraro said.

"A bourse listing remains a strategic scenario for us, but it's not something we will pursue in the short term," he said.

Morellato reported flat sales for 2012 at 190 million euros (159.8 million pounds), while earnings before interest, taxes, depreciation and amortization, or EBITDA, rose to 23 million euros from 21 million the year before.

Carraro said he expects a flat EBITDA this year, with growth in exports likely to make up for the weakness in the domestic market. Next year core earnings could rise, he added.

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