Catfight on the catwalk and Gucci is losing
Saturday 27 February 1999
Mr De Sole, whose accent is suspended halfway between Lazio and the Lower East Side, is chairman of Gucci. He is small and dapper, with smiling eyes, a ferret-like quickness, and he speaks with considerable determination.
He will need it. Mr De Sole spent most of London Fashion Week away from the hospitality tents, fighting a battle from his Mayfair office against Bernard Arnault, chairman of the French luxury goods giant LVMH Moet Hennessy Louis Vuitton, who is engaged in an intricate legal battle with the small Florentine luxury house.
The latest swipe in a vicious catfight that ranges one corner of Harvey Nichols against a large segment of Bond Street and Fortnum and Mason's wine department came on Thursday, when Mr Arnault announced he was taking Mr De Sole to court. The result of the case in Amsterdam, where Gucci's shares trade, could be the end of one of the century's more remarkable fashion revivals.
Mr De Sole hinted that he might retire if his rival wins. A close friend said Mr De Sole, who with his protege, the brilliant Texan designer Tom Ford, has transformed Gucci from a lounge-lizard has-been to the ultimate in late-90s chic, "would definitely consider his position".
Mr Ford, who is ironically a friend of Mr Arnault, is reported not to be happy with the developments, and if he leaves with Mr De Sole, there will effectively be no Gucci left.
The spat began last week when Mr De Sole incurred the fury of Mr Arnault by issuing 20 million new shares to his employees after the French company had secretly bought a similar amount itself and demanded a seat on the board.
Finding its stake diluted and emitting cries of "not fair", LVMH issued a lawsuit against Gucci, claiming the tactic was illegal. One of Mr Arnault's senior advisers said it was like "creating imaginary voters to win an election". He added that some other Gucci shareholders could also sue Mr De Sole.
In his only face-to-face interview with the British press this week, Mr De Sole told The Independent why he is using such extreme tactics.
"LVMH are suing me, but the other shareholders? Pah! Why would they?" he said.
"The only shareholder who wants to sue me is Mr Arnault. Now, I'm a lawyer, and you can sue anyone for anything. The question is whether you win. And I'll do my very best to stand up to LVMH."
His adversary, Mr Arnault, is described by some as "the Rupert Murdoch of the luxury industry". He collects companies like his customers collect labels. Under his stewardship his company has acquired Louis Vuitton, Christian Dior, Givenchy, Christian Lacroix, Kenzo, Moet et Chandon, Dom Perignon, Veuve Cliquot and Krug.
Not all the companies he now controls wanted to be controlled by him, and he reportedly has his eyes on Armani and Prada as well as Gucci.
The Frenchman's supporters say he has democratised the fashion and luxury goods industry to the extent that his labels, which were once available only to the chosen few, are now accessible to the middle classes. To criticism that he only cares about the bottom-line, Mr Arnault's supporters reply, in the style of Mr Murdoch, that fashion is a business.
"I think Domenico De Sole is motivated in large part by what he thinks is in it for him if he forces us out or forces us to make a full takeover bid," a senior LVMH official said.
Mr De Sole is listening attentively to questions in his minimal, black- and-white Mayfair office. The chairman looks very un-Gucci, conservatively dressed in one of Tom Ford's charcoal suits, a blue shirt and a red-patterned tie.
I ask him, jovially, whether in issuing the extra shares he wasn't just being a cheat. There is a silence. "A cheat?" he says, spitting out the "t". "About what? I am just protecting my shareholders. LVMH must make a proper bid, not a creeping acquisition which we and all the shareholders will lose out on."
By all accounts Mr Arnault sees his next acquisition as his next challenge. What about Mr De Sole? "My next challenge? A happy retirement," he smiles.
As William Nygren, the fund manager with the Chicago-based Oakmark Select Fund, which holds a significant Gucci stake, said yesterday, Mr De Sole and Mr Ford are a brilliant team, just like a perfect sports partnership. If one goes, nobody knows what will happen.
(All acquired by Bernard Arnault)
Moet & Chandon
Duty Free Shops (Far East)
Le Bon Marche (Paris)
Diving in at the deep end is no excuse for shirking the style stakes
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