PARIS — Giorgio Armani has a message for LVMH Moët Hennessy Louis Vuitton chief Bernard Arnault: Call me anytime.
That was one of his provocative declarations Thursday during a lively keynote address at the International Herald Tribune’s luxury goods conference, which wraps up today at the Four Seasons George V hotel here.
Pressed during a question-and-answer period to address succession issues and the future of his $2 billion fashion empire, Armani allowed that one possibility would be to take on a large conglomerate as an investor while maintaining management and creative control. “Mr. Arnault, pay attention,” he quipped with a smile and a laugh.
Not that Armani, 69, is in any hurry to retire or sell. He said his company throws off enough cash to fund its global expansion, which means he does not require any outside investors or an IPO.
Still, he allowed that he would not be around forever. “I’m no longer 20. And I’m perfectly aware that the situation can become grotesque,” he said, speaking in Italian with an English translator. “To still be in command as a designer at 85 seems absurd.”
So who could replace him? “On the creative side, I have people working with me whom I have trained, who will be able to carry on my work brilliantly,” he said.
Releasing key financial data in tandem with the conference, Armani added his voice to the chorus of fashion executives declaring a turnaround in the luxury sector. He said his group’s 2003 sales would decline by about 3 percent — but that represents a 3 percent increase at constant exchange rates.
“There is now clear evidence that a positive trend is under way,” Armani said in a statement distributed to attendees. “Among these indicators are rising customer traffic levels through our stores, a greater number of tourists in the world’s most important cities and, perhaps most importantly, increasing levels of optimism for 2004 and 2005 among our major wholesale clients.”
Armani also noted the group expects to commit an additional $66.5 million, or 55 million euros, to investments in the company this year. Over the past six years, about 70 percent of cash flow — about $847 million, or 700 million euros — has been plowed into its factories, stores and brand diversification. Forthcoming openings include a major flagship in Shanghai for his Giorgio Armani and Emporio Armani brands.All dollar figures have been converted from the euro at current exchange.
Not all speakers expressed a rosy outlook for luxury, however. “We don’t think it’s going to be a fantastic 2004,” said Ferruccio Ferragamo, ceo of Salvatore Ferragamo SpA. “We are cautious, and optimistic, but prudent. We have to face many challenges.”
Michael Zaoui, managing director and head of mergers and acquisitions for Morgan Stanley in Europe, cautioned that while many companies, markets and analysts have declared the crisis over, the sector is affected by “an incredible variety” of factors big and small — from individual decisions to global economic fluctuations.
During a largely unscripted presentation, moderated by IHT fashion editor Suzy Menkes, Armani credited his success in the business to humble beginnings in retail — first as an assistant window dresser — which gave him direct contact with the public. He said that experience helped him understand how average people derived satisfaction from selecting and buying clothes. “[Designers] should serve the public, not use them as a target for their experimentation,” he stressed.
Elaborating on the theme, Armani took a swipe at journalists who deride designers with commercial appeal in favor of those who advocate newness or sensation for its own sake. “For example, we once produced a Japanese collection. The press loved it, but we didn’t sell any of it,” he said.
He also took the industry to task for its obsession with “highly paid geniuses.”
“We should forget that and just roll up our sleeves,” he said.
References to the forthcoming exits of Tom Ford and Domenico De Sole from Gucci Group next April — some veiled, some humorous — were a running theme throughout Thursday’s presentations.
In her introduction, Menkes likened Ford’s departure to a “death in the family,” but tempered her remarks with a joke that it would be difficult to find someone with his star quality — “unless of course Tom Cruise is up for the job,” she said.
Even Morgan Stanley’s Zaoui could not resist ending his slide presentation with a picture of Ford with the provocative caption: “Will he go to Hollywood?”Asked to comment on Ford’s departure and the importance of designers during a videotaped interview with Menkes, Christian Dior president Sidney Toledano said: “I would have done everything to keep my designers. They not only design products, but they bring money into the company. They are the main assets.”
During a panel discussion about the pros and cons of family-owned businesses, Santo Versace, president and ceo of Gianni Versace SpA, addressed head-on all the rumors that have swirled about the firm. “The company is not for sale,” he said. “Of course we are looking to be stronger financially, but there is no question that the family will remain the majority owners.”
On the topic of family, Brioni chairman and ceo Umberto Angeloni was blunt about the pitfalls, warning that family members often carry excess responsibility and are not as accountable as unrelated managers. While stressing Brioni generates enough cash to remain independent, he said an IPO could be in its future as a way to improve corporate governance and accountability.
Christian Blanckaert, chairman and ceo of Hermès Sellier, the main subsidiary of Hermès Group, argued the luxury business is incompatible with the growth demands of the stock market. “This endless necessity to be bigger than the others is a calamity,” he said. “Today, it’s hectic. Everyone is in a hurry.”
He noted that although Hermès is publicly listed, about 80 percent of shares are held by family members, which gives it a unique character.
Creative issues were also a chief subject at the conference. Bruce Klatsky, chairman and ceo of Phillips-Van Heusen Corp., was peppered with questions about his firm’s Calvin Klein acquisition, and whether the designer’s decreased role in the company would hinder its ambitious expansion plans. “I don’t think Calvin’s personality is inextricably linked to the product,” he said. “The genius of Calvin is he’s created an institution. In any case, Calvin is available to all of us.”
Concetta Lanciaux, executive vice president of synergies at LVMH and a key talent scout for Arnault, said the industry must find new ways to aid young designers, saying that funding their own brands and collections might not be a wise use of funds. “A lot of the great creators of this century had apprenticeships, like Hubert de Givenchy, who worked for Balenciaga, and others,” she said. “I believe in experience. You have to work a bit.”Speakers slated for today’s sessions include Carla Fendi, chairman of Fendi Group, designer Rick Owens and Robert Burke, vice president and senior fashion director at Bergdorf Goodman.
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