The Tecnica Group has just completed two transactions to strengthen its market position in outdoor footwear. The Italian sports group has increased its majority stake in Lowa from 60 percent to 75 percent. The remaining 25 percent of Lowa is still held by its former chief executive, Werner Riethmann. Lowa is Tecnica Group's chief manufacturer for high-end footwear, especially outdoor boots.
Tecnica purchased its additional shares from the family of Renzo Castellani, the owner of Riko Sport, which has been working for Lowa since 1992 – and this leads us to the other transaction. The Castellani family, operating through a company called Elfra, has sold 100 percent of its shares in Riko Sport, a specialist manufacturer of high-end footwear, with its headquarters in Altivole, Italy, and factories in Italy and Slovakia. Riko has been manufacturing only Lowa shoes. In fact, the company has been Lowa's main manufacturer for the past several years, achieving a recent pace of 12,000 pairs per day – in such categories as light trekking, casual, children's, task force and safety. Riko will now become a subsidiary of its long-time client company. It employs about 1,900 people.
Lowa's new CEO, Alexander Nicolai, views the shift in ownership as a way to improve “synergy between the company's different departments.” Lowa generated revenues of €191 million last year, including €182.9 million from outdoor footwear, and sold a total of 2.87 million pairs of shoes. Headquartered in the Bavarian town of Jetzendorf, where it has a small factory, Lowa is said to be very profitable.
The acquisition of Riko Sport came after Lowa complained about rising labor costs, particularly in Slovakia, where the establishment of a new automotive factory has made it difficult to retain workers. As a result, while the volume of shoes sold went up by 3.2 percent last year, Lowa's revenues increased by 4.5 percent due to higher average selling prices.
Evidently, Tecnica has been able to indulge in these acquisitions largely thanks to its own good results of late as well as the support of a strong new minority investor, Italmobiliare. For 2018, it posted nearly $400 million in revenues, including €196 million in outdoor footwear.
According to Alberto Zanatta, Tecnica Group's chairman, they are an extension of the group's efforts to “reduce the seasonality of our sales.” His father, Giancarlo, led the group's acquisition of Lowa in 1993 precisely to become less dependent on variable snow conditions.