Even Donald Trump Can't Make Italian Tailor Brioni Great Againby
Italian suitmaker hurt by falloff in Russian luxury spending
Brioni suits have also outfitted Barack Obama and James Bond
Brioni, the Italian maker of $7,525 wool and silk suits that are favored by the likes of Donald Trump, is cutting jobs to adapt to slowing demand, another sign of distress from the beleaguered luxury industry.
“Production capacity needs to be adapted to the current market needs,” Brioni’s Paris-based parent Kering SA said in a statement, without disclosing the scale of the job cuts, which unions have said may total 400. The goal “is to rebalance Brioni’s business perspectives and in the long term preserve jobs and local production.”
The cuts mark the decline of what was a top men’s tailor less than a decade ago, outfitting Trump, Barack Obama and even James Bond in some installments of the spy franchise. Despite its high-profile clientele, Brioni’s revenue has been under pressure since Kering bought the business in 2011, and in October 2014 Kering brought in a new CEO amid a broader management overhaul.
Lately, fewer Russians have been shopping for Brioni’s suits and $595 cotton shirts in Europe, following sanctions tied to the situation in Ukraine. Russian tourists cut their spending by 22 percent in January and 13 percent in February, continuing a downward trend that started in 2014, according to UBS, citing data from payment processor Global Blue.
Brioni “has been overproducing in some areas, suits in particular, to a specific clientele that has materially weakened,” MainFirst Bank AG analyst John Guy said. “The Russian clientele is very subdued.”
Kering doesn’t break down Brioni’s results, grouping them in a unit dubbed “Other Brands,” which reported a 9.9 percent drop in profit last year. The division also includes the Alexander McQueen and Stella McCartney labels.
Kering said the cuts won’t affect the running of production sites in Brioni’s home region of Abruzzo. The French luxury group has focused on turning around handbag maker Gucci, its largest brand, leaving less investment for its smaller units. In December, it sold shoemaker Sergio Rossi after years of struggle.
Brioni was founded by tailor Nazareno Fonticoli and entrepreneur Gaetano Savini in Rome in 1945. The brand has 46 boutiques around the world, according to a Kering spokesman, down from 74 when Kering acquired the business.