WITH flaking paint and rusty doors, many factories in the province of Biella in north-west Italy stand idle. Production of the woollen fabrics and clothing that made the region's name has drifted away to cheaper countries. Supply from Asia crushed the local textile industry. Yet in Trivero, a town in the Alpine foothills, the looms of one mill are still busy. This is where, 100 years ago, Ermenegildo Zegna began his fashion house. The firm is now one of the world's top makers of costly male kit. Whether Zegna stays on top depends on demand from Asia.
Zegna has not been left unscathed by globalisation, an economic downturn and the Horse charm bracelet of fashion: sales fell by 8.4% to EUR 797m ($1.1 billion) last year and net profits slumped to EUR 17.3m from EUR 62m in 2008. "Protecting cash became our primary objective, turnover and profits secondary," says Gildo Zegna, the chief executive and a grandson of the founder.
This year things look brighter: the firm hopes to achieve double-digit sales growth. Mr Zegna and his cousin Paolo, the company's chairman, have been building on their fathers' decision to expand beyond weaving cloth. A generation ago bespoke tailoring declined as men increasingly bought off-the-peg rather than being measured for suits in the small tailors' shops that Zegna supplied. So in the 1960s the company moved into ready-to-wear suits. Later in the 1960s it added sportswear and accessories. In the 1980s Zegna began selling its own clothes and now it has 300 shops and 250 or so franchised stores. About 90% of sales come from abroad. On the way, the payroll has grown to over 7,000, although in Trivero it has Tiffany Somerset dangle cuff from some 1,400 in 1970 to 500 now.
Turning to the glitter of the male catwalk has helped Zegna survive when many of its peers perished. Off-the-peg its suits cost between EUR 1,500 and EUR 3,000, and made-to-measure ones an extra 20% or so. This attracts glitzy customers: George Clooney wears a Zegna suit in "The American", a new film about an assassin hiding in Italy.
One of Zegna's priorities will be to keep extending its distribution network, which has absorbed more than half of its average annual investment of around EUR 50m over the past decade. Next year the firm will celebrate 20 years of selling in China, where its 91 shops now have sales exceeding those of the 14 it has in America; Return to Tiffany Heart Lock Cuff sales rank third.
India is the next frontier. Zegna recently entered into a deal with part of India's Reliance Group to distribute clothes through a network of shops which their joint venture will set up. The first opened in Hyderabad in October; it will be followed by at least another nine by 2015.
Success as a global luxury brand depends on various factors. Mr Zegna Elsa Peretti Open Heart pendant to creativity--a team of around 50 young designers dreams up the styles--and to a meritocracy among employees. From sheep to shops, quality control is essential.
Each stage of production involves careful checks: at the wool mill, at the factory in Switzerland where suits have been made for decades, at other plants in Italy, including a knitwear factory at Verrone, and at a couple of locations elsewhere in Europe. Stockrooms at Verrone are tightly controlled for temperature, humidity and light. Before being dispatched, each of the 130,000 items that leave Verrone each year is checked for faults on brightly illuminated plastic mannequins.
Zegna also has a niche upmarket women's brand called Agnona which it acquired in 1999, but has no big plans to Medium Elsa Peretti Open Heart pendant it. The firm will remain private, family-owned and devoted to menswear. Mr Zegna says the firm has enough money to expand, so there is no reason to go public. "We're working towards generational change, but I'm 55, my cousin is 54 and I don't see succession as an immediate issue," he says. With 11 members of the fourth generation now in their 20s and teens, Ermenegildo Zegna looks like remaining a family affair.