By  on February 14, 1994

MILAN -- Four years after Maurizio Gucci transferred the headquarters of the luxury-goods group bearing his family name to Milan from its hometown of Florence, the Gucci company is going back home.

For cost-cutting reasons, Investcorp -- the investment bank that last September bought out Maurizio Gucci's 50 percent stake in the firm to gain 100 percent ownership -- has decided to close the Milan headquarters in Piazza San Fedele as of March 15 and concentrate Gucci's operations once again in Florence. Even with the headquarters shift to Milan, Gucci has maintained offices and production facilities in Florence.

The company told its Milan staff the news at a meeting Thursday, it was learned. The decision was confirmed Friday by a Gucci spokeswoman, who said that Gucci will retain some sort of presence in Milan, though the details are still undecided.

The closing reflects "a clear strategy of maintaining the company's competitiveness," the spokeswoman said. "The current management found a situation created by the previous management that was untenable -- problems of efficiency and costs. Given that the Milan structure involves very high costs, they have decided to regroup."

She declined to elaborate on the costs of the Milan facilities, although the rent charges alone have been estimated at about $2 million a year.

After Maurizio Gucci lost the battle for company control that raged for more than a year, William Flanz, who had been Investcorp's point man for its Gucci investment, took over Maurizio Gucci's executive powers and is working with Gucci's preexisting management to set the company back on an even keel.

Of the some 45 Gucci employees currently in Milan, only a small number is expected to be transferred to Florence, according to sources present at the meeting. Creative director Dawn Mello and senior members of the design and administrative team are expected to stay on with the company despite the change, sources said. The spokeswoman said she didn't know which or how many employees would be moved to Florence. Milan employees started meeting with personnel officials on Friday.

The spokeswoman denied rumors that some of Gucci's Milan operations, such as advertising and information and financial management systems, would be transferred to its U.S. subsidiary in New York."The company is Italian and will remain Italian with all the major functions being concentrated in Florence. The management is committed to safeguarding the quality and style of Gucci products," she said.

Separately, Gucci announced 10 stores slated to open in Italy and abroad during 1994. The locations include Pesaro, Italy; Kuwait; Dubai; Antwerp, Belgium; Bogota, Colombia; Johannesburg; Lausanne, Switzerland; Mexico City; Caracas, Venezuela, and Guam.

The stores, ranging from 240 square feet to 900 square feet, are either freestanding boutiques or in-store shops and are all under franchise agreements. Gucci also said it is renovating and enlarging its Turin store.

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