IBrands Global’s new CFO Carmine Pappagallo, a veteran of the high fashion industry, is aiming to integrate the sprawling company’s businesses by developing key performance indicators (KPIs) and consolidating finances on one technology platform.
The family-owned brand collective and global supply chain platform sells products through three major verticals that include apparel such as the casual sportswear label Pam & Gela, food-related products such as pizza boxes, and health and wellness such as Bluzen brand of infusions and oils. During the pandemic, the company also became one of the major suppliers of PPE and masks to the food services industry.
“The company has grown dramatically … and as it often happens, the infrastructure did not grow at the same speed,” Pappagallo said, adding that he will lead the planning process to develop KPIs but that leaders who are charged with executing it will also be involved. “I really believe the top down approach to business planning doesn’t really work.”
Pappagallo also plans to move the company’s finance function to a cloud enterprise resource planning system (ERP) though he has yet to identify which system they will choose. The process is likely to be a little challenging due to the company’s diverse portfolio, he said.
The goal, which Pappagallo described as ambitious, is to lay the groundwork to align IBrands’ offerings and distribution channels to enable it to grow its revenue to $500 million in 2025.
Rising freight costs
The company’s more eclectic product offerings signal a shift for Pappagallo, who has spent much of his career heading up the finance operations for luxury labels. He served as CFO of Valentino, Elie Tahari and was controller at Fila.
IBrands CEO Remy Garson said in a statement that Pappagallo would be a “major factor” in the growth of the company's fashion, health and wellness, and food service verticals.
The company sells its products to big-box retailers such as Wal-Mart and TJ Maxx as well as department stores like Bloomingdales, via e-commerce sites such as Amazon and through distributors like Sysco and Performance Food Group.
Among his priorities, Pappagallo is focusing on developing a more consistent approach to the company’s revenue and accounts payable cycles. For example, he is hoping to extend the time from invoice to paying vendors to a 30 to 60 day range from the current mixed approach.
Separately, the disrupted supply chain and freight costs have been a major consideration for the company. Many IBrands products are sourced from Asia but it recently diversified to Mexico, he said. That's allowed the company to bypass the significant disruption in China and allows for a much faster time to market, he said.
Pappagallo said he expects the war in Ukraine will push freight costs higher than the company had anticipated this year due to rising energy costs. That means the company will likely consider whether it can increase some of its prices but it’s not clear how much the market can absorb, he said. Those types of cost are a factor that Pappagallo looks at very differently than when he was working in the luxury sector.
“I come from an industry that had 80 to 85% margins that allowed you to absorb a lot of these types of situations,” he said. “A lot of our business is done at a fraction of that … and when you have an increase in freight costs, you feel it.