Luxury time for Gucci's survivor
The man who dragged the great brand out of its period of civil war and naffness savours victory; THE MONDAY INTERVIEW; Domenico De Sole
A quietly spoken and outwardly mild man, Mr De Sole is showing off. Behind the glass, draped on headless mannequins, is the 1996 men's autumn collection, hot off the Milan catwalks. This happens to be the day, moreover, when Gucci's fashion director and the person responsible for these clothes, Tom Ford, will be receiving a special achievement award from the Council of Fashion Designers of America.
The prize was to be Mr Ford's - the ceremony was actually last Monday - but much of the satisfaction was surely Mr De Sole's. As president and managing director of Florence-based Guccio Gucci SpA and of its Dutch- based holding company, Gucci Group NV, he finds himself heading a concern that is positively drenched in success. And he, as much as anyone, is in awe of that fact.
It is not just the fashion industry that is paying attention to Gucci these days. ("Give me Gucci", exclaimed Harper's Bazaar last year.) The buying public has been mobbing the Gucci shelves in search of its latest "Sex Mod" fashions created by the 34-year-old Mr Ford, as well as its more classic leather handbags and shoes. And, finally, investors are impressed too. Gucci completed a triumphant initial public offering last October and has watched its shares double in value in the 14 weeks since.
The story is most stunning when you consider Gucci's recent past. Founded by Guccio Gucci in 1923 as a purveyor of fine leather goods, the company gradually expanded until by the 1970s it had become an international symbol of luxury and exclusivity. By the mid-1980s, however, the Gucci edifice was starting to crack. In its third generation since Guccio, the family was descending into strife in the boardroom and in the courts. The Gucci brand, meanwhile, was being cheapened as too many products bearing the trademark of the intertwined 'G's, some of canvas and plastic, flooded onto the market. Where once it stood for Riviera chic, the insignia came rather to signify duty-free naff.
Mr De Sole lived through it all and likes to refer to himself as a veteran of the "Gucci world wars". A partner in a prestigious Washington DC law firm, he joined the company as the head of Gucci America in 1984. "World war one", he says, began with the worst of the family in-fighting in 1987 and ended in 1989 when Investcorp International, the Bahrain-based merchant bank, captured 50 per cent of the company. "World war two" came in 1993. It was briefer and concluded with Investcorp securing the remainder of the Gucci stock after buying out the remaining family shareholder, Maurizio Gucci. Months later, Maurizio was shot to death by a mystery assailant on a Milan street. About Maurizio's murder, which remains unsolved still, Mr De Sole talks evenly but with obvious distress.
Mr De Sole is candid about how close Gucci came to extinction. He pays tribute to Investcorp for gambling on the company, noting that in October 1993, one month after the bank's final buyout, Gucci was in liquidation proceedings. "What happened to Gucci was that their way was lost," he says, noting that at one time all the family board members designated themselves designers and were introducing their own Gucci lines onto the market. "There were Gucci products really all over the place. The product was viewed - and was - of a lower quality and the brand was really depleted. That hurt the company a lot."
Married with two daughters, Mr De Sole was given the task of reviving Gucci's fortunes almost as soon as Investcorp won complete control in 1993. He was summoned from America to Italy in early 1994 and appointed chief operating officer. One of his first moves was to eliminate the extravagant new headquarters that Maurizio had opened in Milan only four years earlier and relocate all management in the company's native Florence. He continued the process he had already started in the US of cutting back franchise and duty-free outlets, reduced the Gucci product range and dramatically boosted investment in staff training and advertising. Gucci's advertising budget hit $26m last year, compared with $6m in 1993. Mr De Sole expects to spend $40m on promotion this year.
His mantra, however, is "consistency". "You have to achieve what I think is almost an obsession with consistency. That is what distinguishes great brands from those that come up and disappear. It is critical to a company. Across the company you need total alignment. As a customer, you want to make sure you have the same look, the same image, whether you live in New York, Milan or Timbuktu."
He also likes to insist that Gucci prices, though hardly low, compare well with those of rivals like Hermes. And while many luxury retailers - Hermes and Louis Vuitton among them - are also achieving sales growth, theirs has not come close to matching Gucci's.
He admits that he has been helped by economic recovery and a revival of high-end shopping. But he is also proud of his success. "I turned around an organisation that in 1994 Coopers and Lybrand called beaten up and dispirited. Now its people are the proudest in the universe".
Perhaps most astonishing is how the Gucci name, in spite of all that beset it, has endured and recovered its old, pre-naff allure. "That is the one thing that for me has been truly extraordinary about this experience: the strength of this incredible name. When you consider how many silly things were done and all the family feuding. When you think about it, what did not go wrong? Sweetest of all was listing day on the New York Stock Exchange last October. The offering was 16 times oversubscribed. The $22-per-share opening price was immediately shattered and such was the demand that trading had to be delayed for 45 minutes. Before the morning was over Mr De Sole rang Florence where the workers had gathered in the canteen to watch the launch and awarded them all a bonus of L1m (pounds 420) after tax. He admits that, ever since, he has been very popular in the company.
"Someone asked me, how did I feel," he remembers of that day. "And I just looked back at all those difficult years and the wars and I said that I felt like there had been this huge race with a lot of people running and that while we were running everyone was shooting at us and I was the one who survived and won. But it had been so intense, I had never realised that I had won the race. Until then".
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