During the last few weeks, the name Benetton popped up a lot in the Italian news. Unfortunately for the family, though, it wasn't linked to the success of their apparel venture, but to the Genoa Morandi Bridge tragedy.
Since 1999 the Benetton family controls Autostrade, Europe's largest toll road operator, via Atlantia SpA and Autostrade is at the moment at the centre of a diatribe about road safety all over Italy and in Genoa in particular. In the aftermath of the bridge collapse the Italian government also announced its intention of stripping Autostrade of its concession.
After the bridge collapse in Genoa there have been quite a few articles about the Benetton company highlighting how the family now mainly makes money from ventures that do not have anything to do with fashion. Indeed in the last few years the family started diversifying, looking for more profitable business opportunities, from Autostrade to Autogrill, the highway rest stops and airport restaurants chains.
Both Autostrade and Autogrill had a positive financial year in 2017, while the apparel sector of the company shows no revenue or profit growth, but a record loss of EUR 181 million. The causes of this deterioration are clear and you don't need a financial expert to tell you that competition from high street retailers have contributed to turn Benetton from the epitome of affordable Made in Italy fashion to a crumbling company.
This story makes you think a lot, though: the Benetton brand offers a wide range of products – from clothes to accessories for men, women and children – and it has shops all over the world, yet it is in a constant crisis and its losses are clearly proved by papers and financial reports. So if a powerful family such as Benetton turned to other sectors to survive, how can we believe that other ventures with less experience and with infinitely smaller infrastructures and resources than Benetton can be fashion behemoths?
Take the story of Chiara Ferragni, Italian influncer extraordinaire. The Instagram celebrity is getting married today in Noto, Sicily, to Italian rapper Fedez (who also appears on TV as one of the judges on the Italian version of X Factor), in an extravagant ceremony that is raising a few dilemmas.
The couple mounted a Coachella-themed amusement park complete with Ferris wheel in the centre of Noto and invited a long list of guests comprising fellow influencers and celebrities à la Paris Hilton. Ferragni claimed the dress for last night's party was "supplied by Prada" (you mean it was a gift or you bought it from a boutique?) while her wedding dress by Dior was designed by Maria Grazia Chiuri who will also be among the guests attending the ceremony (bizarre, but from evidence posted on Instagram some of the guests are also sporting what looks like Dior saddle bags – is this the second part of the Saddle Bag-Gate or is it just a coincidence?).
The couple also enraged the Codacons grouping of Italian consumer associations as Fedez and guests flying from Linate airport in Milan via Alitalia were welcomed by customised screens at the gate and special tickets issued by Alitalia with the Ferragnez (Ferragni-Fedez) logo. The Italian Air Company shouldn't be allowed to do it since it isn't a private jet charter service, but Alitalia issued a statement explaining the screens and the tickets were the result of a "commercial agreement" with the couple.
Ferragni and Fedez's accounts on Instagram boast 14 million and 6.2 million fans, which makes them proper social media celebrities. Yet the more you stare at all this display of pseudo-wealth, the more you wonder if this is all for real.
Ferragni first started taking pics of herself modelling different outfits with the help of her then boyfriend Riccardo Pozzoli, one thing led to the other, and soon the images were collected in a blog (The Blonde Salad) that helped them winning some of the first collaborations with different brands (including Benetton that a while back invited the blogger to be a member of their judging panel in an advertising campaign competition).
Ferragni and Pozzoli then started a company in 2011, TBS Crew srl, followed a year later by Serendipity srl. More collaborations followed with Ferragni receiving fees (calculated in 2014 between $30,000 and $50,000) to take parts in various events.
Paolo Barletta, CEO of the Barletta group invested 500,000 EUR in Ferragni's accessories collection (shoes are produced by Mofra, a company based in Puglia owned by the Morgese family). As the years passed the blog became a platform on which fans can also buy her own collections or other brand's, so while TBS remained focused on the blog, Serendipity concentrated on e-commerce.
In April 2018 Ferragni's brand, the only one owned by Serendipity, was valued at EUR 36,2 million by a financial advisor commissioned by Paolo Barletta himself. It should be highlighted that the Barletta group owns 40% of Serendipity, Ferragni 32,5%, Riccardo Pozzoli and Mofra Shoes, 13,75%. The financial advisor based his report on a market-based brand valuation method consisting in multiplying the brand's turnover by a multiple derived from similar transactions and based the calculations on projections for the years 2018-2021.
Now the problem with this valuation method is that the value seems extremely inflated especially when you consider that Serendipity's revenue for the 2017 financial year was EUR 1,4 million, but the profit only hit EUR 4,900.
Ferragni is also a majority shareholder of Tbs Crew that actually grew thanks to the ecommerce sales. Yet, despite its growth, Tbs' revenute was EUR 3,2 millions, and the company registered a profit of EUR 6,000 (debts amounted to EUR 983,000 in December 2017). In a nutshell the company seems to have a low profitability.
According to some reports on the Internet, sales from the Chiara Ferragni Collection generated around EUR 20 million, but this can't be verified. So, while Ferragni and Fedez may be celebrities for their appearance on adverts, TV programmes and other assorted events, the story of the blog turned successful business venture may be only partially true.
After all, if a major brand like Benetton that produces millions of garments a year is in a crisis because of the competition, it sounds more or less impossible for an inconsistent brand like Ferragni's that mainly produces derivative collections to flourish. Millennials love it? Well, maybe, but if it were so the streets would be flooded with her clothes and with copies of her "Blonde Salad" shirts and that's not happening.
Another tangible proof that we may be in front of something financially unclear is the fact that the couple asked their guests and friends not to give them any gifts, but to make a donation on the gofundme.com/the-dream-chiaraampfederico site hoping to reach EUR 50,000 Euro and donate the money to "followers in need" (yes, I know, don't laugh...), but so far they have reached around EUR 20,000 Euros (including Fedez's parents' gift), something that makes you wonder if the guests are just a bunch of cheapskates or if the couple hasn't even got all the support it claims to have (you would imagine that fame and celebrity would guarantee big donations in a relatively short time).
In a way these contradictions could be easily explained by dividing the revenue of such modern Insta-celebrities into social media revenue (that eventually generated an income) and real financial profits. Ferragni may be a hit when it comes to the former, something that has guaranteed her to appear in adverts for different products, from underwear to shampoo, and has therefore generated an income for the blogger-turned-Instagram celebrity, but, for what regards real financial profits generated from the actual manufacture and sale of a proper product, well, the turnover is more or less inconsistent (otherwise the Benetton family would call her to restore the fortunes of their brand...). The dichotomy between the extremely curated portrait of her life and everyday activities and the actual profit of her company generates discrepancies that may reveal her role of entrepreneur is restricted to successfully selling her own image and not real products. It would be interesting to see if there are tangible assets in the company's name (industrial machines? real estate assets?) or in Ferragni's name (mind you, there may be also a grey area regarding companies in the USA Ferragni may be involved in as she spends time in Los Angels as well...).
In a nutshell, this entrepreneurial story of love and money (more money than love judging by the pics posted on Instagram as the couple seems extremely keen on branding everything from their plane tickets to their son's little shoes...) and surprisingly little talent (Ferragni's frivolous blog and Fedez's superficial songs are shallow products for Insta-consumers, and they aren't certainly the last bastions of culture for a disenfranchised generation) may just be a glorious advertising campaign shrouded in pink candy cotton, at least until the Italian tax police starts investigating real financial reports and bursts the bubble. But that will be another story and we'll recount it when it happens.