Armani Faces a New Century

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Fashion designer Giorgio Armani was really looking forward to the first year of the 21st century. 2000 marks the 25th anniversary of his company and his 65th birthday. Armani made big plans. He would have an exhibition of his work at the Guggenheim Museums in both New York and in Bilbao. He would unveil an office in Milan with a new theater for his fashion shows, he would launch home and cosmetic lines, and build a massive Milan retail outlet to house Emporio Armani, Armani Jeans and the first Armani Casa store.

But 2000 is off to a tumultuous start. In February, Andrew Grossman, the man Armani had hired 10 months earlier to oversee U.S. operations resigned. Last month, Matthias Vriens, the creative director he had hired in July (and who was already working part-time from Paris) took a job at Gucci. And then, last week, it was announced that Armani's managing director and key deputy, Giuseppe Brusone, would be leaving after 15 years with the company.

The departure of three key figures before April makes it unlikely that 2000 will be the year that Armani decides what to do with his company. With no heir apparent (though Armani's two nieces work for the company), Armani has publicly mooted various scenarios: take the company public; team up with a luxury goods group; or set up a corporate structure that could carry on without him. In 1998 the company racked up $850 million in sales and a net income of $135 million, making it the most profitable fashion house in Italy.

Brusone reportedly favored an alliance, a move Armani increasingly opposed, and this split may have led to Brusone's resignation. The company played down the news, calling the departure "not surprising." But the financial community was surprised. A luxury goods analyst said, "As far as I understood, [Brusone] was running the show. It says something very important about a company if you have several people leaving at the same time."

The departures come at a time when Armani is facing stiff competition on its home turf--men's suits--from the likes of Zegna. And 19 years after its introduction, the younger and cheaper Emporio Armani collection is struggling to find its identity--just two signs that the brand's image needed a boost. So in 1999, aside from planning museum exhibitions and opening stores, Armani created several key positions, leading some to think that he wanted to remain independent. In addition to hiring Grossman, his first U.S. chief in five years, Armani also brought in a head of global communications and an expert to launch leather accessories--a profitable product category that Armani had not yet tapped.

Brusone's departure could actually make room for more such appointments. "This is not a funeral," said InterCorporate luxury goods consultant Armando Branchini. "It's an opportunity for the rebirth of the brand. Giorgio Armani products have great potential, but they need new ideas and new management--a new approach to the market." Perhaps 2000 will be a memorable year after all.