Quotes of the Day
In the days leading up to his recent Gucci spring 2004 runway show, Tom Ford was distracted. Contract negotiations with Pinault-Printemps-Redoute (PPR), the French retail group that controls Gucci Group, were not going well. But that didn't stop the designer from interrupting a fitting to ask an assistant to dash over to a nearby restaurant with a Polaroid camera. Ford was meeting some journalists there, and he wanted to make sure the restaurant had the right look. When it comes to image, Ford likes to control every detail, right down to the rug.
It's perhaps not surprising then that control was the issue at the heart of the decision last week by Ford and his business partner, Domenico De Sole, to leave Gucci. It was what the duo had been fighting to maintain for the past year as they negotiated the terms of their contracts with Serge Weinberg, the low-key but firm chief executive of PPR. The pair's departure, if inevitable, was still the most cataclysmic thing to happen to the fashion world since Gianni Versace's murder in 1997. It rocked the luxury-goods business from Madison Avenue to the Place de la Bourse, where PPR shares slumped 5%. And De Sole, 59, not given to public displays, wept as he told his staff the news.
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He had reason. In just 10 years he and Ford had engineered a miraculous transformation of Gucci — from a dying label with $200 million in revenue into a flourishing, $3 billion luxury conglomerate with subsidiaries that include such brands as Yves Saint Laurent (YSL), Stella McCartney and Alexander McQueen. With his eye for louche glamour and his movie-star image, Ford, 42, redefined luxury, giving it a sexy, provocative edge. For most of the '90s it seemed as if he and De Sole could do no wrong. Ford had an unerring eye for reinterpreting what the public wanted; De Sole's managerial acumen made Gucci into a model of luxury expansion. Their departure from the scene, insiders fear, may mark the precise moment when that sizzle sputtered out of fashion.
Especially since many luxury-goods companies are now paying for overreaching in the '90s. Prada, which acquired Jil Sander and Helmut Lang back then, has been struggling with the resultant $743.6 million debt. And LVMH is reportedly looking to sell the Donna Karan company. Then there are retreating industry stars like Calvin Klein, who retired last summer, and Donatella Versace, who in an attempt to curb financial woes is closing stores and cutting budgets.
Moreover, two years filled with SARS, terrorism and war in Iraq have destabilized luxury fashion, driving the business and its creative talent down-market. Designers like Isaac Mizrahi and Todd Oldham have taken refuge — and found success — at Target. And even brands like Ralph Lauren and Calvin Klein are playing catch-up with Banana Republic and J. Crew, introducing new, inexpensive lines. As one industry insider put it, "None of the [Gucci brouhaha] matters because we'll all be wearing Target and Abercrombie & Fitch in two years."
Until recently, Gucci had seemed to operate outside that sort of climate change. It was as if things were always cool there. Much of this was due to Ford, who redefined the role of fashion designer, taking a more active role in management in addition to dictating the look of ad campaigns, store displays and even the floral arrangements in corporate offices. Equally at ease on the red carpet with show-biz royalty like Gwyneth Paltrow and Madonna and at Manhattan charity balls, Ford is known for wearing variations of just one "look" each season. Right now it's a velvet jacket with a starched white shirt. For one runway show, he reportedly hired hairdressers to cut and style the ushers' hair. De Sole is just as compulsive when it comes to management. During the negotiations, he went out of his way to explain developments to every employee, including the cleaning people in the company cafeteria.
But the fashion forefront is a very expensive place to be. The current turmoil at Gucci can probably be traced to 1999, when De Sole and Ford turned to Francois Pinault, the French billionaire who controls PPR, to help them fend off an unwanted takeover attempt by the rival French luxury group LVMH Moet Hennessy Louis Vuitton. Pinault bought $3 billion worth of newly issued Gucci stock, acquiring a 42% share in the company. After a bitter two-year battle with LVMH'S Bernard Arnault, Pinault ultimately prevailed, agreeing to buy up to 70% of Gucci on the stock market and to offer shareholders $101.50 a share for the rest in April 2004.
Why would Pinault pay that dearly for Gucci only to allow the men who made it so valuable to walk out the door? In a conference call last Tuesday, Weinberg and De Sole declined to say why they couldn't reach an "appropriate balance" in their discussions. De Sole cryptically quoted a Chinese proverb, "Same bed, different dreams."
According to sources close to Weinberg, there was no single stumbling block. Ford and De Sole were insisting on formal independence from PPR, even after it acquired 100% of the Gucci Group. Weinberg jokingly said earlier this year that he had "no intention of designing dresses." But he had been pressuring Ford to relinquish the design director job at the YSL label, which has not been selling well.
Whatever principles were at stake, the consensus across the board is that Pinault was crazy to let the pair go. London-based Merrill Lynch analyst Aymeric Poulain says the market "will continue to question the value of the Gucci brand without Tom Ford." Vogue editor in chief Anna Wintour was similarly dismayed. "This decision sends out a rather depressing message that the significance of their talents was not recognized in the way that they should have been," she said. "Our business is about glamour and image and celebrities and charm and some things that you really can't nail down with numbers."
One of those things is the ability to attract talent. De Sole and Ford are known for their recruiting prowess, and financial analysts say retaining key personnel will now be the priority for PPR. Just hours after Ford and De Sole's departure was announced, headhunters in Paris and New York City were deluged with phone calls from companies looking to poach talent. Among the most sought-after prizes are two handbag designers, Maria Grazie Chiure and Pierre Paolo Picciole, who created last season's best-selling horse-bit bag.
PPR will take its time finding successors to Ford. It has formed a search committee and probably won't make an announcement before April. Early bets are on Alexander McQueen to design Gucci, and Marc Jacobs for YSL (although his contract with Louis Vuitton may be unbreakable).
The bigger question is where De Sole and particularly Ford will go. Many sources believe that De Sole, an avid sailor, will retire. "It's something I've been thinking about for a long time, and so has my wife," De Sole told TIME, adding that he doesn't yet have a game plan. Ford has hinted that he might go that route too. At the Milan shows last month, he spoke of retiring to his ranch in Santa Fe, N.M. But he's not the type to ride off into the sunset. He has always said he will not start his own label; still, it's unlikely that he will walk away from fashion forever.
Then there's Hollywood, where Ford has a home and a lot of connections. "He's always said he wanted to produce movies," said Burt Tansky, president and CEO of the Neiman Marcus Group. "Arnold Schwarzenegger's old job is open. He could be Tom the Terminator."
- Kate Betts