SternBusiness

Top, from left to right: James Ferragamo, Dean of the Stern Undergraduate College Sally Blount-Lyon, Stern Dean Thomas Cooley, Salvatore Ferragamo, and Massimo Ferragamo.
Bottom: Massimo Ferragamo (left) and James and Salvatore Ferragamo describe their family business at the Stern event held at the Ferragamo flagship store on Fifth Avenue in New York City.

n June the Ferragamo family hosted a Stern event for a select group of alumni at their flagship store on Fifth Avenue. Members of the Stern Executive Board organized the event, which offered an inside look at the Ferragamo business. The evening grew out of Stern Executive Board members’ vision to build a “Stern marketplace,” which encourages the engagement of alumni through educational, professional, and networking opportunities.

During the course of the evening, Massimo, James, and Salvatore Ferragamo spoke about the Ferragamo family history and brand and provided an overview of the luxury retail sector. The current Ferragamo business structure features founder Salvatore Ferragamo’s six sons and daughters, each with a role on the board of directors. In addition, several other relatives have an active role in the organization. To assist in attracting external management, the family decided that only three members from the third generation should be involved in the business. These three members were required to complete a University degree, preferably an advanced degree, work at an outside company for a minimum of two years, and acquire good English language and information technology skills.

Salvatore Ferragamo (BS ’93, MBA ’97) discussed how the Ferragamo family is expanding its brand portfolio into the wine industry and agro-tourism with Il Borro villa, located in Tuscany, Italy. The Ferragamo family purchased Il Borro in 1993, and Salvatore has led the charge to restore the estate and its surroundings. Il Borro has become a destination that reflects the typical Tuscan lifestyle and produces sophisticated Italian wine in a Bordeaux style. Guests enjoyed a tasting of the wine at the event.

His twin brother, James (BS ’93, MBA ’97), spoke about the family connection to Stern and New York University, noting that he still uses Professor Aswath Damodaran’s financial models when completing valuations. The Ferragamo family has also developed a special purple NYU Torch tie, which James says allows Ferragamo to showcase what they do to the large international community at NYU.

Dean Thomas Cooley attended the event and shared the guests’ enthusiasm. “I am grateful to James and Salvatore for giving us an insider’s look at their family business. Events such as this one show the depth of talent and range of accomplishments of our alumni. Multiply this energy and entrepreneurial enthusiasm by the 70,000 Stern alumni in more than 100 countries, and you quickly get a sense of what an extraordinary and formidable alumni network we have built at Stern. And it keeps growing, too. Every year, the network expands with new graduates and new alumni who value the sense of community and connection that this network represents.”

James (left) and Salvatore Ferragamo.

1. How have you been able to keep Salvatore Ferragamo a family business after all these years?

James: The company has always been private with very limited risk taking and has always maintained a healthy balance sheet. Today, six family members have a role on the board of directors. My father Ferruccio, my uncle Massimo, and my aunt Fulvia have an active role in the organization. From my generation, the third generation, only three have an active role: our cousin Diego di San Giuliano, who assists the family office; Angelica Visconti, who is currently based in Shanghai and is following the development of the China market; and myself. I am product director for women's leather goods. My responsibilities range from merchandising and marketing to creation and product development.

2. Why has the company remained private?

James: Being private has allowed the company to think more long-term rather than short-term. By doing so, we have been able to build on the achievements of our grandfather, Salvatore, by expanding our product offering and building international distribution. Today, we are present in over 60 countries, and we’re still expanding.

3. What are some markets that you aren’t currently involved in where you see the business expanding?

James: In March, we opened our first shop in India, and we believe the opportunity for growth in this market is equal to the opportunities we’re seeing in China, where we have 25 points-of-sales with high double-digit growth. Our future challenge will be maintaining our advantage in this emerging market as the competitive framework changes.

4. Asia presents both a challenge and opportunity for luxury goods companies like Ferragamo. The opportunity is the new market; the challenge is piracy and competition from low-cost labor. How is Ferragamo dealing with Asia?

James: Because our product offering relies on Italian craftsmanship, piracy has been limited. We strive to create products that are clearly made in Italy. Not only because this is our heritage, but also because the products are crafted with unique detail that are not easily copied.

5. How did the family become involved in Il Borro?

Salvatore: Our father purchased Il Borro from Duke Amadeo of Aosta, cousin to the heir of the Italian throne, in 1993. The Borro estate is not only a private family retreat, but also a fine resort where others can escape the pressures of urban life and enjoy a very special Tuscan living experience. We wanted to cultivate the estate’s natural assets and preserve its origins and beauty, which have lasted more than a millennium. There are no antennas, wires, or phone lines. Our goal was not to disturb the beautiful illusion of what it looked like a thousand years ago.

6. How is Il Borro’s wine an extension of the Salvatore Ferragamo luxury brand?

Salvatore: Il Borro is synergistic with the portfolio of our family’s luxury holdings, including the fashion and accessories business, four hotels in Florence, and Nautor Swan, a yacht-building company. Our name means something on the wine bottle, and we are as proud of that as we are of the other products we make. The wine business is a special developmental focal point for Il Borro. Production has grown from 6,800 bottles in 1999, to 80,000 in 2004. This year, we should reach 200,000 bottles.

7. How has being twins worked to your advantage and disadvantage?

James: There are many advantages in being twins. The biggest one is having a born friend to share all the experiences with during our time in New York.

Salvatore: I think the main advantage of being a twin is that I have someone who is very close to me. I understand him, and he understands me very well. The down side of being a twin is that you are often associated as one person with the common phrase, ‘the twins did…,’ and since we are identical, it is difficult to make an excuse.

8. How did studying at NYU Stern and working in New York help you as you entered the business world?

James: NYU helped me to balance my professional experience with my academic experience. Living and working in New York City provided the opportunity to understand the practical application of what I learned, as both a graduate and an undergraduate, whether it was about finance, fashion, marketing, or advertising.

Salvatore: Studying in New York gives you the unique opportunity to learn in the business capital of the world and to be in contact with people from different countries, cultures, and businesses. This is very important as I am promoting Il Borro estate worldwide, and it is crucial to understand, recognize, and respect different cultures when entering into any type of global business relationship.