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 With its competitive prices, edgy styles and fast design cycles,
Arezzo's Schutz brand can rival Chinese and European imports to the
United States, Chief Executive Alexandre Birman, 39, said in an
interview.
Arezzo, which already has a Schutz store on Madison Avenue, is going
against a tide of dwindling manufactured exports from Brazil that
has afflicted even its once-booming shoemakers.
Years of overheated inflation and an overvalued currency meant few
Brazilian companies could take on rivals in the world's largest
economy.
But crashing raw material prices have plunged Brazil into a deep
recession and weakened its currency to record levels, from 1.60 per
dollar in 2011 to 3.60 per dollar this week, opening a window of
opportunity in Birman's eyes.
"In clothing, there's no way Brazil can compete with China, but
we've got a shot with shoes," said Birman, who cut his teeth in the
American market before taking over the family business.
"In fashion footwear, we're competitive with China at 3.50 per
dollar."
Schutz will open a Beverly Drive, Los Angeles location on April 19
with a coterie of fashion bloggers in attendance. The brand is
aiming for a niche between Chinese imports that cost less than $100
and European heels running north of $250, Birman said.
Schutz's hip designs have paid off with high-profile early adopters.
A photo of reality show star Kylie Jenner wearing brown Schutz
over-the-knee boots has received nearly 1 million likes on Instagram
since February.
"We don't see a clear leader in U.S. footwear retail today, like
Nine West used to be," Birman said, referring to the shoe company
whose bonds have tumbled since a 2014 leveraged buyout by private
equity firm Sycamore Partners. Nine West did not respond to a
request for comment.
After the Los Angeles opening, Birman plans another U.S. store this
year to gauge demand for Schutz in upper-middle-class malls. The
company has mapped about 30 such locations for a full U.S. rollout
in 2017 if all goes according to plan.
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The U.S. expansion comes as Arezzo sales have stagnated in Brazil
due to the worst recession in decades. Birman said domestic sales
are flat so far this year, dodging a double-digit drop in wider
retail sales, as Brazilians that used to buy luxury heels overseas
are trading down to local footwear.
Arezzo is committed to a net cash position as part of its five-year
plan, Birman said, as the company avoids double-digit interest rates
in Brazil and gives itself flexibility to invest.
A focus on foreign markets has already boosted combined export
revenue from Arezzo's four brands by 67 percent in 2015 and Birman
expects similar export growth this year, contributing up to 13
percent of net revenue. A third of exports are U.S.-bound, between
Schutz retail, department stores and e-commerce.
The Schutz brand may be new to the U.S. market, but the man behind
it is no stranger.
At 18 years old, Birman launched his own shoe company, the original
Schutz, and within a decade it was exporting about half of its
output from a factory in southern Brazil, much of it as
private-label production for the Aldo Group. When Arezzo decided to
open its first U.S. Schutz retail location on Madison Avenue in
2012, Birman took a sabbatical to oversee the move.
The Schutz U.S. stores are supplied by dedicated design and
production teams in southern Brazil that can turn around a new pair
of pumps in a month, tracking new trends faster than Chinese
operations that can take three times as long.
(Additional reporting by Christian Plumb; Editing by Andrew Hay)
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