Italy's export-savvy northern towns live and die on their entrepreneurial passions. Around Bologna, home of Ferrari, Maserati and Ducati, the passion is glamorous sports cars and motorbikes. In San Daniele, it is prosciutto so fine it virtually melts in your mouth.
In Montebelluna, about an hour's drive north of Venice, it is shoes. But not just any shoes. The town designs and makes casual and activity footwear for every use, from soccer and bike riding to urban trekking and mountaineering.
With Asian rivals coming on strong, the Montebelluna shoe cluster is pumping small fortunes into technology to gain a competitive edge. The model is Geox, the local shoe maker that used a funny obsession - sweaty feet - to create a global brand.
Mario Moretti Polegato, Geox's chairman, founder and majority shareholder, wants to rid the world of hot sweaty feet. His technicians will tell you the subcutaneous jungle of sudoriferous glands in the feet produce up to 100 litres of sweat a year. The Geox shoe provides the sweat with a handy exit route in the form of a porous membrane stuck atop a perforated rubber sole. "The shoe that breathes," is the Geox marketing line.
Today Geox claims to be the No. 2 brand in the global "lifestyle casual footwear market," after Clarks and just ahead of Ecco. Independent research backs the claim.
"At the moment, we are unique in the world," Mr. Polegato says. "We are technology with Italian style."
The growth of Geox has been phenomenal, in spite of the shoes' fairly high prices. Kids' shoes range from $40 to $80, while adults' go from $85 to $250. Launched in 1995 with five employees, it achieved sales of €340-million ($533.5-million) by 2004, the year it joined the Milan stock exchange.
By 2008, sales had almost tripled to €892-million, up 17 per cent from the previous year (using constant exchange rates). The number of Geox stores, both company-owned and franchises, grew to 940 last year from 724 in 2007. Nineteen are in Canada, one of its fastest-growing markets.
But the rapid expansion and the recession have delivered a rare blow to the company that could do no wrong for so long.
While Geox's profit in 2008 was unchanged over the previous year, at €123-million, it lost money in the fourth quarter and the profit margin has fallen in the last two years. The share price has taken a beating, though is well off its late 2008 low. At its peak in 2007, Geox traded at more than €15. Its recent price was about €6.50, giving it a market value of €1.7-billion.
While the worst seems over for Geox, and the "buy" recommendations are creeping back, analysts are concerned that Mr. Polegato's enthusiasm for breathable technology might lead him astray. Geox is pushing hard into breathable clothing, mainly jackets, and is dabbling in sports shoes.
The clothing line is selling well but the new line of sports shoes, which are still in the experimental stage, would take Geox into a market dominated by adidas AG, Nike Inc. and other global marketing behemoths. "How do you compete with Adidas and Nike?" asks Peter Farren, an analyst at the London investment bank Bryan Garnier & Co. "They are all about marketing. Geox has only a limited marketing budget."
Geox's success has made Mr. Polegato a billionaire and he is happy to display his wealth.
The company's press kit comes with the latest Forbes richest-people ranking: Mr. Polegato, 56, is in sixth spot among Italians, with a net worth estimated at $1.5-billion (U.S.). While most of the wealth comes from Geox, he is not entirely a self-made man. He is a third-generation wine maker and his vineyard, Villa Sandi, is one of Italy's most prolific wine producers.
Mr. Polegato holds forth in an interview just outside Montebelluna at the Villa Sandi itself, a Palladian-style mansion regarded as a minor masterpiece of the Italian High Renaissance. He was born in the villa, which has been the family's estate since his grandfather's era. It is surrounded by some 70 hectares of vineyards and has its own hydro generating station and consecrated chapel.
Built in 1622 (shortly after death of the Venetian architect Andrea Palladio), the elegant house, with its towering white Ionic columns, was later briefly the home of the neoclassical sculptor Canova, and Napoleon.
Etchings of Napoleon decorate the interior. Exquisite Murano-glass chandeliers hang from the ceilings. One of the lower rooms contains Mr. Polegato's collection of antique motorcycles. The endless caverns beneath the house contain three million bottles of Villa Sandi wines. The vast gardens are dotted with sculptures, fountains and lemon trees. Mr. Polegato hosts fox hunts, without the foxes, from the villa. "Our fox is a rider who hides in the forest," he says.
He and his younger brother, Giancarlo, had every intention of carrying on the family's wine business after the death of their father in a Ferrari accident. But his life's course took a strange diversion in the early 1990s, when he was attending a wine fair in Reno, Nev.
He took a few hours off to walk in the desert. His feet began to swelter. So he conducted an experiment. With a Swiss Army knife, he gouged a hole in the soles of his running shoes (which were Nikes and, stripped of their "swoosh" logo, are on display at Geox's research centre). His feet immediately felt cooler and the idea of the "breathable" sole was born. The challenge was to find a way to allow perspiration out without letting water in.
Back in Montebelluna, Mr. Polegato, with the help of some university researchers, fiddled with the technology. They eventually came up with a Teflon-like membrane whose latest versions have a billion micropores per square centimetre. The micropores are much smaller than a droplet of water but larger than a molecule of sweat vapour. The vapour escaped but the soles were waterproof.
The membrane was patented. At first he just wanted to license the technology to shoe makers and get back to making wine. "Even though no one else had this technology, no one wanted it," he says. "So I decided to produce the shoes myself."
Geox last year produced 22 million pairs of shoes in 28 factories around the world. In spite of the recession and the cost of rapid, and probably overly aggressive, store openings, Geox has remained profitable and Mr. Polegato thinks the company's long-term growth is secured and virtually boundless. The technology, he says, can be applied to any type of shoe, from sandals and the golf shoes just introduced by Geox to men's dress shoes and classic women's pumps.
Breathable garments, sold in the same stores as the shoes, are coming on strong and sports shoes may be the next product line even though analysts think they could be a shoe too far. Mr. Polegato says he's taking things slowly on the sports shoes front, but is nonetheless convinced that market is ripe for Geox technology. "How can you wear sports shoes that don't breathe?" he says.
Mr. Polegato has left the wine business to his brother and his team so he can devote his energies to eliminating sweaty feet. He says he has no intention of selling Geox - he owns 71 per cent of the company - and hopes to pass it on to the next generation. His only child, 27-year-old Enrico, a commercial lawyer, is Geox's vice-chairman. "My second child is Geox," Mr. Polegato says.
While shoes are his passion, he cannot resist indulging his entrepreneurial instincts once in a while. The latest Polegato invention is called Claxa, a double-walled glass wine bottle that, he claims, can keep chilled wines cool for hours. "Start with a simple idea like this and you can create a world phenomenon," he says.Report Typo/Error