Nice Footwear, an Italian footwear licensing company that also owns the Kronos brand of sports shoes, is considering a reshoring of its production from the Far East to Italy and the launch of e-commerce. Specializing in the design and sourcing of sneakers, the company has a team of 21 designers at its headquarters in Vicenza. It produces roughly 70 percent of its shoes in China, 20 percent in Taiwan and 10 percent in Vietnam, but the Covid pandemic has led it to rethink its supply chain. It has selected ten shoemakers in the Marche and Veneto regions to evaluate the feasibility of the project.
One reason for the project is evidently the company’s relatively small size and the large number of its SKUs. Because of Covid, its sales declined by around 15 percent to about €20 million in the financial year ended on April 30, 2021 as compared to the previous one, despite a strong recovery in the second half, thanks to the addition of many new clients. The company’s CEO and sole shareholder, Bruno Conterno, said in an interview with Shoe Intelligence that it is targeting annual sales of between €25 million and €30 million in the next three years.
Besides Kronos, the group has footwear licensing agreements with four brands - Ellesse, Conte of Florence, Avirex and Fred Mello – with some territorial restrictions. The Ellesse line is only for Italy, where the Cisalfa Sport chain has an exclusive distribution agreement for the brand. The three other licenses are for the European market. In addition, Nice Footwear has a license for Lotto sneakers sold in France.
About 60 percent of the company’s revenues come from so-called “special projects” to design and produce sneakers for “premium international brands.” In this case, Nice Footwear sells the shoes directly to the brands which then distribute them worldwide. Conterno declined to disclose the names of his clients, but in previous regulatory documentation released for a €3 million bond issued in July 2020, the company indicated that it had worked with Lumberjack, Dainese, U.S. Polo Assn., Etonic, Skechers, Blauer, Napapjiri, Guardiani, Sparco and Champion.
The company expects some of its future growth to be generated by its Asian subsidiary, Nice Footwear Hong Kong, which posted sales of $2 million in fiscal 2020 in China, South Korea and Indonesia, as well as by Kronos, which specializes in sports shoes, mainly for basketball and football. Its revenues surged in fiscal 2029 to €1.0 million from €0.6 million, following the hiring of a brand manager and the signing of some licensing agreements. It recently became the sponsor of a basketball club in Turin.
The company does not have a proprietary e-commerce platform and its digital sales are carried out through marketplaces such as Amazon, Vente Privée and Zalando. To protect its wholesale clients, Nice Footwear says that it develops ad hoc collections for these platforms. Nice is now evaluating opportunities for a proprietary digital platform that would be financed by last July’s bond issue, which was fully taken up by a sole investor, the Italian investment fund Finint SGR.
Nice Footwear has the right to issue an additional €2 million in bonds at similar conditions to the previous placing by the end of 2021. The bonds bear an annual interest rate of 4.375 percent and have a six-year maturity.
The proceeds of the bond were also used to develop a proprietary software for 3D design, which has streamlined the design process. The company claims that the time needed for decision-making with brand licensors on product launches has been cut by 80 percent and design costs halved.
Nice Footwear spends about 2 percent of its revenues in research and development, focusing on eco-friendly products and innovative production techniques. It has developed a seamless upper as well as a sole which is 30 percent lighter and better fits the foot’s palm.
Conterno is the only owner of Nice Footwear, but is ready to dilute his stake through a capital increase to finance the company’s growth. He said that he is not proactively seeking an investor. The proceeds of a recapitalization would be used to finance “a couple of initiatives currently underway”. But, Conterno would also be interested in buying a brand, “possibly 100 percent eco-friendly.”
