Do Italian firms recovered from the economic downturn? Lessons learned by a niche in fashion sector

This paper examines a niche within a sub sector in the Italian textile-clothing industry: men fashion formalwear. The purpose of the paper is to analyze key fundamental data of firms perating in this market niche before and after the global 2008/09 economic downturn. This paper provides a comparative study, between Winners (those who recorded a positive 2007/10 EBITDA Compounded Average Growth Rate) and Losers, in a peer group of Italian manufacturing firms, on business fundamental data and performance indicators over last four years. A wide range of factors has been studied, such as export intensity, profitability, financial leverage, Relative Market Share, capital investments, number of brands, and number of direct point of sales. Dataset is based on primary data, extracted from official financial statements for the 2007-2010 reporting period. In order to compare the two groups, we tested the “difference-in-differences” for selected key data and run bivariate correlation among variables. The study provides also some case studies explanations on best performers. It was found that operating profitability, financial discipline, and multi-branding strategy are the main factors which differentiate the two groups. Losers were not different neither worst performers before the 2008/09 global crisis, but they became it. These firms implemented strategies that failed to react to such a global change and, ultimately, failed to maintain a competitive advantage. The peer group sample is formed basically by medium and large firms, although made-to-measure fashion business is spread over hundreds of small and micro enterprises. Hence, findings cannot be generalized to the whole sub sector. The paper shows key figures of Winners and Losers and where they are different indeed. A managerial implication of our results is that sample firms, seeking to boost their Ebitda, should manage a portfolio of brands dedicated to different market segmentation. The general character of the study suggests future lines of investigations at organizational and marketing level.