Rinascente S.p.A.



Strada 8, Palazzo N
Milanofiori
Rozzano
I-20089 MI
Italy
Telephone: +39 02 5758139; 02 57582373
Fax: +39 02 57512468
Web site: http://www.grupporinascente.it

Private Company
Incorporated: 1917
Employees: 29,000
Sales: EUR 925 million ($1.25 billion) (2004)
NAIC: 452111 Department Stores (Except Discount Department Stores)

Rinascente S.p.A. is Italy's leading department store group. The Milan-based company operates under two core brands: the upscale La Rinascente and the mid-market Upim. La Rinascente is the company's—and Italy's—oldest department store format, with its flagship store on Milan's Piazza Duomi, opened in 1917. The company operates 17 additional La Rinascente stores throughout Italy, with a focus on high-end clothing fashions and accessories, perfumes and beauty products, as well as some housewares and related items. The La Rinascente brand also represents an important real estate portfolio, with many other prominent city-center locations in addition to the Milan site, including the group's store on Rome's Via del Corso. The La Rinascente chain generates approximately 35 percent of the company's total revenues, which reached EUR 925 million ($1.25 billion) in 2004. The largest part of the group's operation is its chain of 147 Upim department stores, which operate on a national level and represent Italy's largest store chain. The Upim chain targets the mid-market shopping sector. Rinascente S.p.A. itself was put up for sale at the beginning of the 21st century. Formerly a public company, Rinascente came under the control of Eurofind, owned jointly by the Agnelli family (who also control the Fiat automotive group) and Auchan S.A., one of France's leading department store, supermarket, and other retail groups. After Auchan took control of Rinascente's foods business in 2003, Eurofind put the remainder of the business up for sale. In March 2005, a consortium led by Pirelli Real Estate received approval to buy Rinascente for EUR 870 million ($1.2 billion). That consortium included members of the Boretti family, founders of the Rinascente group in 1917.

Founding in 19th Century,
Growth During Early 20th Century

La Rinascente represented a pioneering force in Italy's retail sector in the 20th century. Even into the 21st century, the company's department stores retained a distinct presence in a retail market heavily dominated by small, often family-owned shops.

La Rinascente itself started out as a small shop in Milan. In 1865, Ferdinando Bocconi set up shop on the Via Santa Radegonda in Milan's center, calling his store "Alle Città d'Italia." Bocconi's shop differed from the other general goods stores in the area at the time, becoming the first in Italy to focus exclusively on ready-to-wear dresses.

Bocconi's shop remained a fixture in Milan's retail market into the 20th century, later moving to a more prominent location, on the city's Piazza Duomo, across from the city's famous cathedral. The Bocconi family expanded the store into a department store format, before opening other shops. By the outbreak of World War I, the family had become one of the city's leading families, and went on to found Milan's first private business school, Bocconi University.

In 1917, the Bocconis sold their shop to another rising Milan industrialist family, the Borlettis, led by brothers Senatore and Romualdo. The Borlettis had gained status as Italian industrialists through their alarm clock factory, among other interests. During World War I, the family had boosted its fortunes by converting production at their factory from alarm clocks to fuses for hand grenades. The family also developed interests in the Italian media market, adding newspaper and magazine interests, including ownership of the country's leading daily, Il Secolo.

The Borletti family continued to expand the Bocconi department stores, introducing a modern department store format. The Borlettis also adopted a new name for the store, turning to famed Italian writer Gabriele D'Annunzio, who dubbed the store "La Rinascente."

The new La Rinascente opened at the end of 1918 to great fanfare. Yet just weeks later the company was struck by disaster, when a fire destroyed the store. The Borlettis set out to rebuild the Duomi site, reopening its doors in 1921. In celebration of that event, the company commissioned artist Marcello Dudovich to create a new series of advertising posters. The first Dudovich poster debuted that year, and through the 1930s, Dudovich's stylized designs became synonymous with La Rinascente.

In the meantime, the Borletti family continued to expand its retail interests. In 1928, the company expanded into a new department store format, Upim. That store chain was based on the fixed-price format launched by Frank Woolworth in the late 19th century. The five-and-dime price format was introduced into Europe at the beginning of the 20th century, most famously by Britain's Marks and Spencer. In Italy, the Upim store adopted price formats ranging from 1 to 4 liras. Upim's family-oriented format became hugely popular among Italian consumers, particularly during the difficult economic years of the 1930s. In 1934, Upim was formally merged into the La Rinascente group.

La Rinascente faced a new setback during World War II when its flagship Piazza Duomi store was bombed by Allied forces in 1943. The rebuilding of the store was completed only in 1950, marking a new era for the company as Italy entered into an extended economic boom period.

Diversification in the 1960s

The growing strength of the Italian economy led La Rinascente to begin exploring other retail areas during the 1960s and 1970s. The company's first diversification came at the beginning of the 1960s, when the company became one of the first in Italy to branch out into the newly developing supermarket sector. First introduced in the United States in the 1930s and 1940s, the self-service supermarket format's appearance in Europe challenged the traditional small grocers. In Italy, the retail sector remained heavily oriented toward its small grocers and retail stores. Nonetheless, the supermarket captured a growing share of consumer spending through the end of the century.

La Rinascente's own entry into the supermarket sector came in 1961, with the launch of Supermercati Sma. The Sma chain grew strongly through the decade. At the beginning of the 1970s, the company extended its supermarket operations into a new direction, borrowing the "hypermarket" format pioneered in France and elsewhere. The hypermarket format enabled La Rinascente to combine its expertise in department store operation with its fast-growing supermarket foods business. In 1972, the company pioneered the hypermarket format in Italy, launching its Citta Mercati, or City Market.

La Rinascente's growth was backed by new majority owners, in the form of the Agnelli family, which also controlled the country's Fiat motor vehicle giant. After suffering through the economic crisis of the late 1970s, the Agnellis temporarily sold off their control of the company, to construction group De Angeli Frua, in 1981. Three years later, however, the Agnellis bought back into La Rinascente, once again acquiring a majority in the company. By this time, La Rinascente was a public company, listed on the Borsa Italiana.

In the meantime, the company had emerged as Italy's leading retail group. This position was boosted by the launch of a new expansion of the Upim chain, notably through the introduction of the first franchise offers in 1975.

In 1983, La Rinascente entered a new sector, launching the Bricocenter chain of do-it-yourself hardware stores. That expansion was followed in 1988 by the acquisition of supermarket rival Sigros e Sagea, which added 77 new supermarkets to La Rinascente's portfolio. The purchase of Sigros e Sagea also enabled the company to extend its interests to the wholesale sector, with eight cash-and-carry stores.

New Owners in the Mid-2000s

La Rinascente continued to expand rapidly into the early 1990s. With its sales topping $3 billion, the company's retail network neared 800 stores. The company also had added to its range of retail offerings, with the electronics and home appliance chain Trony, and the kitchen and home furnishings format Croff. Into the middle of the decade, the company continued to expand its range of operation, notably through the development of a hard discount branch.

The mid-1990s saw a dramatic transformation of the group, however. In 1995, the company acquired regional supermarket group Cedis-Migliarini. This purchase helped tip the balance between food and nonfood sales. By 1996, the company's food sales represented more than 70 percent of total sales. The La Rinascente and Upim chains combined to produce less than 23 percent of sales. By then, the company's total network had topped 900 stores, nearly half of which consisted of franchises.

The Agnelli family, which had transferred its control of La Rinascente to its IFIL holding, had been rumored to be seeking to cash out of its majority holding in La Rinsascente since the difficult years at the beginning of the 1990s. As the Agnellis' core Fiat business continued to experience difficulties through the end of the decade, the Agnelli family stepped up its search for a partner.

Company Perspectives:

La Rinascente covets the acclaim of being the most elegant department store in town, attracting and enjoying the appeal of an international clientele. Striving to maintain this recognition, La Rinascente is constantly restructuring and remodelling its stores to keep up with current trends. It endeavours to satisfy the requests of its customers, and is forever seeking new opportunities to branch out and establish stores in all the main towns and cities in Italy, focal points as well as key shopping malls. Its trading policy is directed towards the continual updating of its products and service standards, aiming to satisfy the most demanding of customers, and underlining its role as the promoter of Italian fashion.

In 1997, IFIL announced that it was transferring its stake in La Rinascente to a new joint venture, Eurofind, with France's Auchan. Under the deal, Auchan agreed to transfer its five Auchan shopping centers, which included both hypermarket and hard discount stores, in Turin, Mestre, Piacenza, Bari, and Milan. In 1998, the two companies agreed to merge their DIY stores, including La Rinascente's Bricocenter stores and Auchan's Leroy Merlin stores, into a new holding company, SIB, or Societa Italiana di Bricolage.

By then, Auchan had gained the controlling stake in Eurofind, which itself built up a shareholding of more than 60 percent in La Rinascente. Under Auchan's leadership, La Rinascente began redeveloping its operations, including launching a refurbishing effort throughout the La Rinascente chain. As part of this effort, La Rinascente began expanding its range of designer labels. The chain also expanded, notably by converting a former Auchan shopping center to the La Rinascente format. By the beginning of the 2000s, the company operated 18 La Rinascente stores throughout Italy. The company also boosted its supermarket holdings with the purchase of supermarket rival Colmark S.p.A.

IFIL and Auchan made a bid to take full control of La Rinascente in 2002, buying up nearly all of the stock Eurofind did not already own and delisting the company. This move preceded a breaking up of La Rinascente, in large part to permit IFIL to exit its shareholding of the company. In 2004, Auchan bought up La Rinascente's food operations, including its supermarket chains.

By the end of that year, IFIL and Auchan announced their intention to sell off the remainder of La Rinascente, which then consisted of the Upim variety goods store chain and the La Rinascente department stores. After receiving a number of bids, the company finally announced that it had reached an agreement to sell La Rinascente to an investment consortium led by the Borletti family, under Maurizio Borletti, a grandson of Romualdo Borletti. Major investors in the consortium included Pirelli Real Estate, while the Borletti family's stake remained at barely more than 1 percent. The purchase, priced at EUR 888 million ($1.2 billion), received approval in March 2005. With a return of the Borletti family to the helm, La Rinascente turned toward further growth in the new century.

Principal Subsidiaries

La Rinascente; Upim.

Principal Competitors

Coin S.p.A.; SME S.p.A.; Standa S.p.A.

Key Dates:

1865:
Federico Bocconi opens Italy's first ready-to-wear dress shop in Milan, later transferring the store to the city's Piazza Duomi and expanding it into a department store format.
1917:
Senatore and Romualdo Borletti acquire control of Bocconi's store, which is renamed La Rinascente.
1928:
Upim, a fixed-price variety goods store, is launched.
1950:
The La Rinascente store, destroyed during Allied bombing attacks, reopens in Milan.
1961:
The company extends into the supermarket sector with the launch of the Sma supermarket chain.
1972:
The company opens the first hypermarket in Italy, Citta Mercati (City Market).
1983:
The Bricocenter DIY chain is launched.
1988:
Sigros e Sagea, a supermarket and cash-and-carry store group, is acquired.
1995:
The company acquires Cedis-Migliarini, a regional supermarket group.
1997:
Auchan and IFIL found Eurofind, which becomes the majority shareholder of La Rinascente.
1998:
SIB, which takes over Bricocenters and Auchan's Italian Leroy Merlin stores, is created.
2002:
Auchan and IFIL launch a buyout of La Rinascente, delisting it from the Borsa Italiana.
2004:
Auchan acquires control of La Rinascente's food store operations, leaving only the La Rinascente and Upim store chains.
2005:
La Rinascente is acquired by a consortium led by the Borletti family and including Pirelli Real Estate.

Further Reading

"Auchan Buys Share of Rinascente Food Unit for EUR 1 Billion," just-food.com, November 5, 2004.

"Aucan et les Agnelli vendent Rinascente," Le Figaro, March 14, 2005.

"Bargain of the Century," Economist, February 19, 2005, p. 60.

"Consortium Wins Rinascente Auction," Financial Times, March 14, 2005, p. 22.

Epiro, Stephanie, "Rinascente's Natural Progression," WWD, June 10, 2004, p. 15.

Grassia, Luigi, "IFIL Ratifies Sale of Rinascente," La Stampa, March 14, 2005.

"La Pirelli Re conquista I magazzinni Rinascente," La Stampa, March 13, 2005.

O'Brian, Heather, "Bidder Would Take Rinascente Private," Daily Deal, October 8, 2002.

"Rinascente Continues Growth," European Cosmetic Markets, April 1999, p. 129.

"Simon in Joint Venture to Develop Malls in Italy," HFN The Weekly Newspaper for the Home Furnishing Network, January 5, 2004, p. 44.

Zargani, Luisa, "Borletti Clan Back at La Rinascente Italian Store Chain," WWD, March 15, 2005, p. 3.

——, "Italian Stores' Modern Movement," WWD, August 15, 2000, p. 17.

——, "La Rinascente Attracts Many Potential Bidders," WWD, December 2, 2004, p. 8.

—M. L. Cohen



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