AN ENTERPRISING ITALIAN SOLE:
POLEGATO'S 10 STEPS TO SUCCESS AND CLIMBING

By Lucy Gordan

Like Andrea Zanfi, 52-year-old Mario Moretti Polegato, trained as a lawyer and agriculturist, is the epitome of an Epicurean Traveler. Both men's love of wine and its promotion caused them to travel frequently on-the-job, but Polegato's oenophilia is still taking him on a multi-step successful detour around the world.

Twelve summers ago, in 1992, after a wine convention in Reno, Nevada, to promote his family's wineries, "Villa Sandi" and "La Gioiosa", both located in Montebelluna near Treviso in the Veneto, Polegato, a passionate sportsman, took a hiking vacation with his wife Licia Balzan, today honorary consul of the Principality of Monaco, in the Rockies. When his feet could no longer bear the heat nor he their bad smell, he borrowed a hunting knife from a gas station attendant and cut several holes in the soles of his sneakers — still his good luck charm — and one in his right hand with a scar to show for it.

STEP 1: Cool, not cooked, feet and no more bad smell, yes, was his first step in the right direction, but clearly not a long-term solution as a sudden rainstorm and puddles soon proved to him.

STEP 2: Remembering that NASA's footwear and clothing were made of a special material with millions of holes, too small to let in water but big enough let perspiration out, a technology freak from an early age, Polegato traveled to Houston and soon afterwards invented a similar membrane to fit between his shoe's sole and his foot. As he'd hoped, it stopped water from entering his shoe through the holes, but allowed the vapor from perspiration to evaporate.

STEP 3: With his airholes and magical membrane patented in 100 countries, since he was a die-hard wine producer, Polegato first tried to sell the patent to some of the big names in leisure footwear: Reebok, Fila, Nike, Adidas, Diadora, Puma, and Timberland.

STEP 4: When they all turned him down, he decided to leave his younger brother, Giancarlo, in charge of the family's wine businesses and resigned himself to going it alone.

STEP 5: In 1995 he recruited five people to help him develop his dream shoe "that breathes." He named the company GEOX for the Greek word geos meaning the earth, and ox for oxygen or x for technology.

STEP 5: A seven year miracle! GEOX now employs 2,400 people directly and an additional 3,000 indirectly through subcontractors. Research (simulated 200-kilometer walks and water injections in heated shoes to simulate perspiration) and design take place at headquarters in Montebelluna; but, because of lower wages there, production is in China, Mexico, Slovakia near Bratislava and Romania, where the GEOX factory at Timisoara employs 1,750.

STEP 6: Thanks to GEOX's success in Romania, 12,500 fellow- Italian entrepreneurs have invested there and in 1997 Polegato was named Romania's honorary consul for northeastern Italy.

STEP 7: In 2002 GEOX began selling its shoes through Nordstrom (70 outlets) and Dillers (17 outlets) in the USA. The company adapts the shoes' materials, designs and cost to the country where the footwear will be sold. For example, the same GEOX model costs 10% less in Mexico, 5% less in Spain, 15% more in Germany, and 20% more in the US than in Italy. In Germany, GEOX offers darker colors and thicker leather than Italy's brighter tones and more elegant materials.

STEP 8: For diversification, in 2002 GEOX developed a patent for breathable clothing based on perforations on two special strips in the shoulder area, which is where body heat and humidity collect. Clothing accounted for 4% of the company's sales in 2003.

STEP 9: Still a privately held company (Polegato is its founder, president, and only shareholder), GEOX's sales more than doubled between 2000 and 2003, leaping from 92 million euros ($85 million) to 250 million euros ($310 million), 63 % in Italy, c. 30% in the rest of Europe, and 5% in North America. Polegato's net gains grew from 3 million to 27 million euros ($33 million).

STEP 10: In 2003, Italy's leading manufacturer of casual comfort footwear and the eighth worldwide, Polegato was awarded "Best Italian Entrepreneur in the World" by Ernst & Young Global — a recognition of which he is particularly proud.

UPHILL CLIMB

In 1998 Geox sold 1.4 million pairs of shoes; in 2003 6.5 million. GEOX expects to sell 10 million pairs of shoes in 2004, more than twice the number of 2002. Polegato expects to make a 12% post-tax profit on sales of 350 million euros ($410 million) in 2004, but he still isn't satisfied.

With 198 stores in 70 countries, Polegato plans to open around 70 new stores in Italy and 30 abroad in 2004. On March 16, GEOX opened its first store in the United States at 595 Madison Avenue on the corner of 57th Street, at the downtown end of Italian fashion mile; the second of several US 2004 openings (two others in the NY area, Seattle, Las Vegas, Houston, Miami, and Detroit) will be on 3rd Street Promenade in Los Angeles; elsewhere: on Nathan Road in Hong Kong, and in the Couo-Dori-Ginza in Tokyo.

In 2003 GEOX opened stores in Moscow, St. Petersburg and its first in China, where by the end of 2005 it plans to open another 99. It counts Bush, Berlusconi, Havel, Pope John Paul II, the Emperor of Japan, and the Royal Family of Monaco among its clients and 2005 sales are forecast at 15 million pairs.

REACHING THE SUMMIT

According to a March issue of Il Mondo, Italy's economic weekly, valued by several banks, Merrill Lynch and Goldman Sachs at between 900 million-1.1 billion euros, Polegato plans for GEOX, called "the Ferrari of Footwear" by The Economist, to go public on Piazza Affari, Milan's stock exchange during the last quarter of 2004 or, at the very latest, the first of 2005. He believes GEOX will earn 550 million euros ($680 million) in 2006, with its profits continuing to grow 30% annually.

In his "free" time Polegato, who is always part-owner of the newspaper Corriere Veneto , a supplement of Corriere della Sera in northeastern Italy, enjoys his collections of Ferraris (a pastime he interested from his father), race horses (one of his 15 is named "Geox"), German motorcycles from World War II, and eyeglasses (he designs his own).



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