Blessed Relief For Sweaty Feet
When you think of sleek Italian fashion, comfort shoes with rubber soles don't spring to mind. But think again. Geox, a maker of "ventilated" footwear based in Montebelluna in northeastern Italy, has more than doubled its sales in the past four years, to $310 million in 2003, and it is marching upmarket. On Mar. 16, Geox opens a New York store near Giorgio Armani on Madison Avenue. This follows a showroom opening on Milan's elegant Via Montenapoleone. Tokyo is next: In April, Geox opens in the Ginza.
The expensive real estate reflects the size-45 ambitions of the Geox founder, chairman, and sole stockholder, Mario Moretti Polegato. The 51-year-old executive thinks the company's "shoes that breathe" formula will prove a winner even in luxury footwear. Geox' design is based on patented airholes and a plastic membrane that lets air in but keeps out water. These features also keep the shoes from suffocating the feet. Polegato aims to get a foothold in all segments of the market -- kids' shoes, sneakers, and dress shoes. "Ours is a mission, not a shoe factory," he says.
With Italian industry reeling from a strong euro and Asian competition, Geox shows that an entrepreneur can still stand out. A combination of innovation, design, smart production, and aggressive marketing has made Geox one of Europe's fastest-growing companies. Annual sales have increased an average of 39% in the past four years. Profits last year, to be reported at the end of March, were about $34 million -- a 42% rise from 2002.
Geox fans range from the Pope to Monaco's royal family. "They have done an excellent job of marketing," says Stefania Saviolo, co-director of Bocconi University's Fashion & Design Management program in Milan. While Polegato spends 10% of revenues on ads, the product also seems to sell itself. "My daughter had a tremendous problem with smelly feet until someone suggested we try Geox," says Rosalinda Bastianini, a Milanese housewife. "They worked -- I thought they were great."
UPHILL CLIMB. But Polegato isn't satisfied. With 200 stores and 10,000 retail distributors in 68 countries, Geox plans to open 50 more stores this year. Most will be in Europe, and most sales will be in the company's sweet spot: casual shoes in the $110 to $120 range. Polegato sees revenues hitting $434 million this year -- a 40% gain.
Polegato's new challenges are to crack the U.S. and East Asian markets and move into the luxury-shoe bracket. Given the euro's strength and Asian competition, these could prove to be hard climbs. But Polegato is undaunted. He shrugs off concerns about the strong euro, noting that Geox shoes are manufactured in China, Mexico, Romania, and Slovakia under Italian supervision. And his designers collaborate with Geox employees in export markets to tailor collections: In Germany, Geox offers dark tones and thick leather, while in Italy it features brighter colors and lighter, more elegant materials.
Indeed, Polegato's pride is his research and development arm, which consumes 4% of revenues. That's hardly surprising, given how Polegato came up with his idea: Hiking in the Rockies 12 years ago, he got tired of sweaty feet and poked holes in his soles. When no manufacturer took an interest in his patent, Polegato, a former winemaker, decided to go it alone.
Today, engineers in Montebelluna take prototypes on 200-kilometer "walks" and inject heated jogging shoes with water to simulate perspiration. Working with university researchers around the world, Geox has also developed a patent for breathable clothing based on perforations in the shoulder area. Clothing accounted for 4% of sales in 2003.
Polegato sees no end to his mission. "Ninety-eight percent of the world's population wears shoes with rubber soles," he says. "Ninety-eight percent of the world's population needs to change their shoes, due to the problem of smelly feet. We are only at the starting point." Shoes, start walking.
By Maureen Kline in Montebelluna, Italy