In the last few posts we looked at Italy-based companies manufacturing luxury products still open for business despite the country is in a lockdown caused by Coronavirus outbreak, and at companies reconverting production to manufacture face masks.
Things have changed in Italy, again: as the numbers of people getting infected or dying were increasing rather than going down, Italian Prime Minister Giuseppe Conte announced last night further measures (that will be valid at least until 3rd April) and the final closure of all non-essential activities (even Amazon will have to prioritise food and health products). This decision was aimed at fighting Italy's biggest crisis after Second War World. At the time of writing this post, Italy has indeed registered over 59,000 infected cases and 5,476 deaths (Lombardy is the hardest hit region with over 27,000 cases).The workers of the Penne-based Brioni company will be relieved at Conte's announcement: just a few days ago the trade unions stated that it was surreal to ask people to stay home while Brioni's workforce was instead asked to keep production going. The trade unions had announced a strike tomorrow if the Abruzzese manufacturing plant had open. This factory is indeed located nearby small towns in the Val Fino area that were recently declared red zones. This area was hit rather badly by COVID-19 and a few towns were put into quarantine (you can't go out or enter the towns in question and the streets that take in or out of the towns are monitored by police forces).
Kering, the Paris-based luxury group owning Gucci, Saint Laurent, Balenciaga, Bottega Veneta and Brioni (among other luxury brands), hasn't so far issued any official document about Brioni's factory. Around ten days ago, Kering was in the news for donating 2 million Euros to health-care organizations in Lombardy, Veneto, Tuscany and Lazio to support the fight against COVID-19. There were no specific donations to health-care organisations in the Abruzzo region (where 587 Coronavirus cases were registered) and that was a shame as that's where the Brioni factory is located, and it almost showed a disinterest from the luxury group towards this brand (that fell from grace in the last few years also after rather disreputable choices at creative level). Shoes for another Kering brand, Alexander McQueen, are also produced in the same region (and the factory producing them was still open this past week), so it wouldn't have been a bad choice donating money to local organisations.
Last Friday, the company posted on its site an initial estimate of the COVID-19 epidemic impact. In the document, Kering stated that "its consolidated revenue for the first quarter of 2020, ending March 31, should post a decline of 13% to 14% in reported terms (down around 15% in comparable terms) versus the first quarter of 2019." The document also stated that, while encouraging signs started showing in Mainland China, the impact of the epidemic is significant in other Asia Pacific markets, Western Europe and, more recently, North America.
Kering announced that it is therefore expecting second quarter 2020 revenue to be sharply impacted by the effect of the epidemic on local clienteles and tourism, and a first half 2020 recurring operating margin in decline, which would be premature to quantify at this stage given the dynamic nature of the situation and the current lack of visibility (Kering will release its first quarter 2020 revenue on April 21 after market close). The company didn't post any documents about the emergency in Italy or the safety of its workers in Italian factories and that was a shame, as that would have made a difference and showed some support and solidarity to its workforce.
Other companies in Italy adopted a different approach: Giorgio Armani was almost ridiculed when in February, after the first cases of Coronavirus were found in Italy, he decided to hold his runway behind closed doors and in an empty theatre, while the show was streamed on the brand's website, on Instagram and Facebook. Around 10th March, the company announced it was going to close its shops, restaurants and hotel in Milan to try and mitigate the outbreak of Coronavirus. Armani then announced the donation of 1.25 million euros to the Luigi Sacco and San Raffaele hospitals and the Istituto dei Tumori in Milan, as well as the Istituto Lazzaro Spallanzani in Rome, and the Italian Protezione Civile (Civil Protection).
Yesterday the designer bought a page on more than 60 Italian dailies (among them Il Corriere della Sera, La Repubblica, and Il Sole 24 Ore) and published a note to all the healthcare providers fighting the coronavirus outbreak.
Armani wrote: "It is moving to see you engaged in your work with all the difficulties and the great efforts that by now all the world knows. And especially to see you cry. I think that this feeling is connected to my own desire to become a doctor when I was young and I was looking to forge my path."
"All of the Giorgio Armani company is tuned in to this reality and is close to all of you: from the stretcher bearer to the nurse, from the family doctor to all of the specialists in the sector. I am personally close to you."
In these difficult times, a short letter of solidarity meant more than a cold press release about the impact of a pandemic on earnings. Let's hope this unprecedented situation the entire world is going through at the moment will prompt many major players in the fashion industry to reconsider the way they deal with the workforce in their factories and start treating them with more consideration and respect, rather than like invisible elves magically manufacturing luxury products in all sorts of conditions all year round.
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