To stay on trend, Italian fashion houses are refashioning themselves for future growth.

Luxury label Ermenegildo Zegna, which opens Fall/Winter menswear previews at Milan Fashion Week Friday, made its 1st move to expand abroad with the Zegna Group’s Summer acquisition of American brand Thom Browne.

The Gianni Versace house’s entrance into the group owned by American designer Michael Kors (NYSE:KORS), Capri Holdings Limited, was finalized last week.

A taste for mergers and acquisitions offers sources of cash and footholds in new markets to fashion companies that want to gain the scale for an international expansion, especially if their target is the tricky Asian market.

Charting a future path is important for Italy’s many family-run brands envisioning generational change and as various companies seek control of distribution channels. Missoni and Cavalli recently did deals with private equity investors to get cash infusions.

While French conglomerates snapped up such powerhouse brands such as Gucci, Valentino, Fendi and Bottega Veneta, the Versace sale to an American label not quite in the luxury tier created a disorientating sense in the Italian fashion world.

The Big Q: Why hasn’t a fashion group emerged in Italy.

The Big A: Carlo Capasa, the head of the Italian Fashion Chamber, dismissed concerns that a world centered in Milan was in peril. “Many Italian companies don’t have Italian owners. But that does not diminish their heritage or their attachment to Italy. They become much stronger. Bottega Veneta opened more stores and has increased its sales.”

The main challenge facing brands is distribution and the significant investment required to gain control of it.

“Before, only a few brands controlled distribution from the beginning to the end. Now it is common to have control over a good part of retail, which can bring more profits by taking out the middle man,” Mr. Capasa said. “But more control requires more investments. Retail drains a lot of cash.”

In the US, he said, the decline of department stores has meant brands have had to invest in creating their own retail presence. An e-Commerce launch also requires a lot of cash to get right.

Maurizio Tamagnini, the CEO of the FSI investment group that took a stake in Missoni last year, said the Italian fashion industry remains strong, representing nearly a 25% of top luxury brands and 20% of the fastest growing.

But despite the innovation in Italian fashion, Italy’s family-run fashion houses “have less inclination” to create a big group, Mr. Tamagnini said.

“It is easy to do, if you want to do it” by combining “the genius of our entrepreneurs with the boringness and the structure of finance,” he said.

Milan fashion stalwart Giorgio Armani is from time to time identified as having the necessary liquidity to create an Italian fashion group. But the designer has said he believes that staying small allows for the flexibility necessary to adapt to market changes.

“I have always believed that economic independence is a fundamental value to work with full freedom,” Mr. Armani told the Italian financial publication MF Fashion. “For this, I have never thought of seeking investments that are not my own.”

While he acknowledged that the sale of iconic Italian brands to international groups “can touch our national pride,” Mr. Armani said they had to be squarely acknowledged as signs of changing times.

“I remain a supporter of independence, but what works for me does not have to be universal law,” he said. “These brands have Italian spirit. If they manage to maintain that intact, then welcome to the international groups.”

Have a terrific weekend.

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Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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