Safilo has appointed Massimiliano Tabacchi, a member of the family that controls the company, as its sole chief executive after sharing the responsibility with Claudio Gottardi, who was shuttling all the time back and forth between the USA and Europe. Gottardi, who became joint CEO together with Massimiliano in July 2006, is officially leaving his post for personal reasons. He will remain a member of Safilo's board of directors and will keep his job as president and chief executive of the group's subsidiary in the USA, which is estimated to represent more than 30 percent of Safilo's revenues.
Gottardi is also expected to continue overseeing the group's retail expansion, aiming to boost its retail business to at least 20 percent of total sales in 2012 from 6 percent in 2007 by increasing the store network to between 700 and 800 units from about 270 currently.
The company also said that Giampietro Sala will replace Carlo Domenico Vanoni as chairman of the group's internal auditing committee. Vanoni is leaving for health reasons.
The brokerage house Merrill Lynch believes that Gottardi was becoming increasingly uncomfortable about his dual role as CEO of Safilo and Safilo USA and related travel commitments. Nevertheless, the timing unsettled investors and sent the share price tumbling to new lows since the stock was listed on the Italian stock exchange in 2005.
Massimiliano Tabacchi, who is 38 years old, is the son of the company's chairman and former CEO, Vittorio Tabacchi. Following its return to the stock market, the Tabacchi family owns 37.7 percent of Safilo through the holding company Only 3T. Massimiliano acted as Safilo's chief operating officer between 2001 and 2006, overseeing R&D, product development, planning, operations, information technology and human resources. He was appointed co-CEO in July 2006 and was named deputy chairman in May of this year.
The appointment is not expected to lead to any change in strategy in the near future as Tabacchi was groomed by Gottardi, who continues to have a significant role in the company. In a statement, Tabacchi said that over the past two years he and Gottardi had refocused Safilo on its core business. He added that he intends to continue the implementation of the business plan presented last Feb. 25 and that the group wants to retain and attract the best managers to execute it and to develop the company.
Some financial analysts believe that Tabacchi could be seeking a more experienced and high-profile manager from outside to assist him. There is some speculation about what could be the future role of Antonio Favrin, the former chairman of Valentino Fashion Group who joined Safilo's board in April. One analyst believes that he could be mandated to find the manager or could even be hired for the job. Favrin was proposed as a board member by the financial group Fidelity, which owns nearly 10 percent of Safilo.
Even though the latest change of management was largely expected, some financial analysts feel that the company mismanaged the timing and should have waited until the release of the first-half results, and the related conference call, scheduled for July 30, to make the announcement and present the young manager, who is little known to investors.
The change at the helm comes at a delicate moment as Safilo is currently renegotiating the renewal of a licensing deal with Gucci. The license expires in 2010 and represents an estimated 15-20 percent of Safilo's annual sales, according to analysts' estimates. The same year, Safilo's license agreement with Dior also expires. This brand represents about 16 percent of sales, according to an estimate. While Gucci is owned by PPR, Dior is one of the leading brands of LVMH.
The Tabacchi family's holding company Only 3T closed 2007 with a net loss of €2.7 million, compared with a loss of €3.6 million in 2006, thanks to €2.14 million in dividends paid by Safilo. During 2007, Only 3T bought 1.9 million Safilo shares for a total outlay of €8 million, representing an average price per share of about €4.20 compared with the current trading price is below €1.50.