Leaving Gucci In Style

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Washington Post

Leaving Gucci in Style
The Former CEO's Favorite Accessory? A Tighter Belt.

By Robin Givhan
Washington Post Staff Writer
Sunday, May 2, 2004; Page D01


NEW YORK -- Domenico de Sole, chief executive officer of Gucci Group, declines to sit atop a desk to be photographed. He's not being asked to stretch out on the black lacquered tabletop like Michelle Pfeiffer in "The Fabulous Baker Boys." But even though he is a star within the fashion industry, he still feels most comfortable partially hidden behind the furniture in the company's Fifth Avenue offices.

In the garment trade, designers have always been the main attraction, with their artistic visions, movie star grooming and practiced charm. But Gucci Group changed that. The corporation made the business end of fashion enticing, dramatic. De Sole, along with creative director Tom Ford, built Gucci from a money-losing proposition into a vertically integrated, disciplined, multibillion-dollar global concern.

While Ford made starlets and fashion editors swoon with sensual jersey evening gowns and sexpot stiletto heels, de Sole romanced investors with tight product controls and an unwavering focus on the bottom line. "I think we've shown how important an industry this is and how much wealth it can generate," de Sole says. "I'm very proud that everybody who invested in Gucci made money."

Friday marked de Sole's last day with the company. Both he and Ford are leaving after contract negotiations with Gucci's parent company, Pinault Printemps-Redoute, failed at the end of last year. The insurmountable hurdle was the issue of control. PPR, a French conglomerate, felt that the millions of dollars it had invested in Gucci bought it ultimate decision-making authority. De Sole and Ford felt their record of success gave such clout to them. So after a runway season of multiple swan songs, it was finally time for the last goodbye.

De Sole's came in the form of a final quarterly report to the board of directors, in which he proudly announced that Gucci retail sales were up 20 percent over last year. It is the sweetest kind of coda for a businessman.

De Sole, 60, with salt-and-pepper hair and an always tailored appearance, is not prone to emotional displays -- although the goodbyes to longtime staff have tested his controlled demeanor. But Gucci has always been personal for him. He arrived when the business was in decline and he steered it to astonishing success. It is now a conglomerate that includes Gucci, Yves Saint Laurent Rive Gauche, Alexander McQueen, Stella McCartney, Bottega Veneta and other brands. It is an $8.5 billion enterprise, although the bulk of its revenue continues to be generated by Gucci.

The departure of de Sole is disappointing for those at the helm of Gucci's smaller brands. Financially, most of them have yet to become profitable, although PPR Chairman Serge Weinberg has said he is not looking to sell or close any divisions. Designer McCartney says the reason she entered into a partnership with Gucci was because the company felt like a family, and her feelings for de Sole have not cooled. "I trust him," she says. "I genuinely trust him."

She cites de Sole's communication skills as one of his greatest strengths. His criticisms, she says, are direct but diplomatic. "He tells you just the way you'd hope to be told."

In considering his departure, she gropes for the right words and finally says with resignation, "It's such a bummer."

De Sole's successor comes from an unlikely source. Robert Polet, 48, is currently the president of Unilever's ice cream and frozen foods division, where he oversees brands such as Popsicle, Breyers and Klondike. "Background doesn't count. Performance counts," says de Sole, who was delivered the news of his successor a few hours before it was made public last month.

His advice to Polet is that in the luxury business, "you have to have a huge discipline about growing. It's very easy to ruin companies. You need huge discipline with stores and communications," he says. "Image is very important. When you're successful, everyone wanted to carry Gucci. I only sold to Neiman's, Saks. . . . You can get drunk with sales. It was very painful to say no to people who wanted to sell Gucci."

In store visits famously termed "terminator trips," de Sole would close even profitable Gucci shops if they did not measure up to the company's freshly burnished image. Licensing -- essentially renting a brand name to a manufacturer -- also was discouraged under de Sole. For example, Gucci currently licenses only eyewear and fragrances -- products that require a special expertise or that have staggering start-up costs. He eschewed almost all of the 167 licenses at YSL. "I don't have anything against licensing," he says, "but 167 licenses is not a business, it's a pizza franchise."

He would also remind Polet that fashion is one of the few industries that does not engage in market research to determine what will sell. "With a lot of products, to look and see what a consumer wants, you look backwards. But with luxury fashion, there's going to be a piece of it where you don't look at anybody, you don't talk to anybody. There is a piece of our business -- the most important piece -- where you're telling consumers what they should buy, not the other way around," de Sole says.

If de Sole has any regrets from his tenure at Gucci, it is the speed with which the company acquired other businesses.

"We bought 10 brands in one year. It's not too much in terms of brands or the quality of the brands. But everything happened very quickly. It was too much to digest," he says. So far Bottega Veneta has shown the most significant growth. Sales are up 60 percent over last year, he says. "In that case we went back to the core of the brand, which was accessories. The previous owners were doing ready-to-wear. . . . It was crap," he says. "We wanted to make it an Italian Hermes."

The next brand to shine, he still believes, will be YSL, which last year still had millions of dollars in losses.

The Gucci saga is a tale of a business's financial turnaround, but it is also the story of international relationships, personalities and passions. De Sole became president of Gucci America in 1984. He was hired after helping Maurizio Gucci, the last of the Gucci family members substantively involved in the company, through tax litigation. De Sole was a tax attorney and a partner in the Washington law firm Patton Boggs. But he started doing his homework, reading about fashion's history and its most influential creators.

In 1994, he moved to Italy -- and eventually London -- to run the entire company and save it from collapse. In 1993, Gucci had less than $200 million in sales and lost $40 million. But Ford was creating strong collections and de Sole was cleaning up problems with distribution, production and sales. Initially, de Sole, who had no experience in fashion or retail before arriving at Gucci, had what would now be described as modest goals. "When I started in 1994, I asked myself what needs to be done to get to $350 million. . . . Then we went public and things were really improving and I thought we could get to $1 billion." The company went public in 1995.

His business strategy, from the beginning, was simple. "We saw ready-to-wear as a way to signify the relaunch, but the business was really accessories," de Sole says. Gucci was ill-equipped to produce and sell the clothes that were garnering so much attention. The company lacked the sales staff as well as the retail space. Those hurdles were eventually cleared, but Gucci's business continues to be dominated by accessories.

De Sole's management style has always been hands-on. "People talk about strategy, but success is attention to detail," he says.

Putting Gucci on the right track was not only a business endeavor but also a diplomatic one. Gucci's production headquarters are in Florence and its corporate office is in London. "Europe tends to be more bureaucratic and more formal -- in general," says de Sole, who was born in Rome but is an American citizen. "I'd ask people in Italy, 'What do you think?' and I could tell they were thinking, 'What [does he] want to hear?' "

"You can't sit in your office in Italy writing memos. They'll think you're crazy. The Florentines are very skeptical people," de Sole says. "They've all read Machiavelli before they were 5."

In many ways, de Sole's background as a lawyer informed the way he managed Gucci. "If you go to a really good law firm, there's no hierarchy. At the end of the day, it's an intellectual approach and you respect people for what they bring to the table," he says. "There's nothing that upsets me more than someone doing something just because I said so. I want people to challenge me. For me, it's like an intellectual exercise."

In 1999, Gucci entered its most tumultuous period since returning to profitability. It had to fend off a hostile takeover attempt by Bernard Arnault, the head of LVMH Moet Hennessy Louis Vuitton. LVMH was the "evil empire" and de Sole was committed to Gucci as if the house bore his own name.

And as he closes the door at Gucci, de Sole praises some of his toughest and most bitter competition -- Prada, Arnault's Christian Dior -- for their creative energy. "I really respect Christian Dior. They've had the tenacity and patience to build a great brand."

In November, when he announced de Sole's departure from Gucci, PPR's Weinberg said: "I know that today is a day of emotion. Do not think we aren't part of it. We are aware of what we owe to Domenico and Tom."

When de Sole delivered Gucci's 2003 financial results in April, he ended by saying, "Gucci has been a major part of my life. Separation will not be easy."

De Sole, who sits on several boards, including those of Procter & Gamble and Bausch & Lomb, is moving with his wife and two daughters to South Carolina, where they have family. He has not announced business plans, but he has not uttered the word "retirement" with any conviction. Thanks to stock options and bonuses, de Sole leaves Gucci a wealthy man. He also leaves with a platinum discount card, identifying him as an esteemed Gucci customer for life.



© 2004 The Washington Post Company
 
im sick of hearing about that de sole man now :sick:

i think someone should make him a Gucci calculator as a leaving present so he can add up all his money :rolleyes:
 

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