Milan fashion cuts its cloth to fit recession

Milan fashion houses hope emerging markets will allow the luxury industry to ride out any new recession.Executives at Milan fashion week were happy to talk about the prospects for growth this year but were coy about 2012 in the face of financial market wobbles and the effect of austerity measures on the mood of European consumers. "Fashion houses have worked on prices, costs. They are getting ready to face a crisis that we hope will not last long," Roberto Cavalli group's chief executive Gianluca Brozzetti saidat the show of Just Cavalli. The luxury industry is normally the last sector to enter recession and the first to rebound, but companies realise they will not be immune from any re-run of the 2008-9 downturn. Known for its animal prints and flowing dresses, Cavalli is betting on the relaunch of its youthful Just Cavalli line with Diesel's founder Renzo Rosso and on new store openings in fast-growing markets next year to ride out the storm. "Demand from emerging countries should offset losses in mature markets," Brozzetti said at a smoky former warehouse on Saturday where denim-clad models wore flowing silk dresses. In a clear sign the industry is cutting its cloth to fit leaner economic times, top brands are widening their entry-level offer to satisfy all pockets and needs. "I think we're witnessing a degree of nervousness that we haven't seen since 2008. The European markets are looking very fragile and US wealthy sentiment is turning bearish," James Lawson, director of international luxury market research specialists Ledbury Research, said. Dolce & Gabbana announced last week they would bring their D&G second line under their top brand, which already makes swimsuits, fragrances and sunglasses. Shoemaker Ferragamo launched its first jewelry line last week with prices of between 300 and 15,000 euros. Speaking in the garden of a neoclassic palace in Milan, chief executive Michele Norsa said he thought Chinese customers would like the finely branded Ferragamo bracelets.At the other end of the luxury chain, emerging brands like Antonio Marras or high-end shoemaker Alessandro Oteri aim for selective shoppers with handmade, made-to-order pieces. "Everybody wants to feel unique," Marras, former creative director of LVMH's Kenzo label, saidat his atelier where he mixed ready-to-wear with couture dresses. Looking at 2011, luxury goods makers such as Ferragamo and Versace confirmed their expectations for a positive year, but declined to give details. Asked if she was afraid of a crisis, Italian designer Miuccia Prada said "no." Prada posted a forecast-beating 74 percent rise in first-half profit and has said it would stick to its expansion plans. Cavalli's Brozzetti said the group would adjust its plans next year if needed. In May, he forecast retail revenues would surge around 29-30 percent this year, as the group revamped its retail network and expands into accessories. Cavalli reported a 6.8 percent increase in net profit in the first half. The only fashion house to say the word crisis out loud in Milan was youthful Italian brand Frankie Morello. A crackling Italian song dating back to the Great Depression resounded on the catwalk to the surprise of the guests, asking: "But what is this crisis all about?"