NEW YORK — The party’s over for Marty Staff, the high-flying and flamboyant president and chief executive officer of Hugo Boss USA, who was put on paid administrative leave three weeks ago.
On Monday, Hugo Boss AG said that PricewaterhouseCoopers had completed its internal audit, and that Staff was being replaced as president and ceo of its U.S. division by Tony Lucia, Boss USA’s senior vice president of sales, effective immediately.
Philipp Wolff, director of communications for Hugo Boss AG, said Monday that Staff resigned to pursue other opportunities. Vincent Ottomanelli, Boss USA’s chief financial officer, remains on a paid leave, he said.
But if the timing of Staff’s resignation might appear odd, Wolff stressed that Boss is not accusing anyone of anything. “It’s done. It’s over,” he said.
The German executive confirmed the inventory discrepancy at the U.S. operations in 2001 is in the amount of $5.6 million, and while the company is still checking a few details, “the investigation is closed.”
Wolff declined further comment about the probe and Staff couldn’t be reached for comment Monday.
Staff was named president and ceo of Hugo Boss USA in May 1998, prior to which he was president and chief operating officer of Calvin Klein Co., a men’s tailored clothing division of GFT USA Corp.
Lucia — who is not a household name in the industry — was recruited by Staff in July 1998 to become senior vice president of sales. Before that, he was vice president of sales for the men’s Le Collezione collection at Giorgio Armani and earlier was vice president of men’s Collection sales at Donna Karan International.
Sources believe Lucia will have a more low-key leadership style than Staff, who was known for his wild streak — from his punk-rocker hair to throwing over-the-top parties in New York and Las Vegas, and even flying the entire organization to Jamaica one year for a Christmas party.
Retailers contacted were pleased with Lucia’s appointment, and said they’d like to see the brand move forward.
“We’ve worked with Tony [Lucia] at Armani and at Boss. He will make the transition as seamless as possible, and he’ll provide a lot of stability. He will be a great person to lead the brand to the next level,” said Bob Mitchell, co-president of Mitchell’s of Westport and Richard’s of Greenwich, the men’s and women’s specialty retailer.
Mitchell said that Lucia has a lot of strong relationships in the market.
As for Staff, Mitchell said: “He arguably created more top-line growth than anybody in the whole industry. Staff provided a spark to that brand that definitely wasn’t there before he came.”
The retailer has carried Hugo Boss’ women’s line since its inception in spring 2001. Jack Mitchell, chief executive of Mitchell’s and Richard’s, added that the women’s line has performed “fair.”
“I don’t think it’s their strongest suit.” He said the women’s and men’s businesses “have been a challenge at Boss [but] we’re great believers in Hugo Boss and I am sure it will work out.”
Boss’ women’s business has had its share of growing pains the past few seasons. As reported in May, women’s sales reached about $49 million last year. For 2002, Boss AG projected worldwide sales of $1.04 billion.
Always in the spotlight and New York’s “party man,” Staff managed to successfully raise the profile of the Hugo Bass label. Whatever he did, he did on a grand scale — whether it was selling the merchandise into stores or gambling in Las Vegas. Retailers and industry executives always wanted to be part of the action. During his tenure, Staff oversaw the opening of a 40,000-square-foot showroom in the Starrett-Lehigh building at 601 West 26th Street here that fused fashion and entertainment. Among its features is a black hall that could be transformed into an after-hours club complete with a DJ booth and a bar; a movie screening room or a formal dining room; a 10,000-square-foot men’s wear showroom, and a VIP lounge. When the showroom opened, visitors to Staff’s office could check out his inflatable shark, signed poster by rapper Eminem, boxing memorabilia, a leopard throw, five remote controls for audio/visual equipment, and a whoopie cushion.
Last year, Boss opened a four-level 22,000-square-foot flagship on Fifth Avenue and 56th Street here estimated to cost between $6.6 million and $7.7 million. The store has soaring ceilings and brushed metal and beige marble, state-of-the art theatrical lighting and sound and natural-feeling minimalist furniture and fixtures. Staff recruited such celebrities as Dennis Hopper, Laurence Fishburne, Will Smith, Julianna Margulies and L.L. Cool J to help design window installations for the opening.
Industry executives were shocked several weeks ago when they learned that Staff was put on a paid administrative leave pending an internal audit by PricewaterhouseCoopers. When word spread that Staff was gone from the company, he was in Las Vegas. Rumors quickly spread about what Staff might have done to cause his abrupt departure, but he uncharacteristically has kept a low profile over the last few weeks and Boss in Germany has never confirmed the nature of the inventory shortfall in its U.S. business.
As reported last week after the company’s annual meeting in Germany, Boss officially lowered its profit forecast for 2002 by 11.2 percent to $87.5 million from last year’s level of $98.6 million. Wolff explained that the $11 million reduction included $5.5 million pertaining to the U.S. inventories, two-thirds “in insufficient reserves” and the remainder representing “inventory that was overvalued.”
Two-thirds of the remaining $5.5 million shortfall was attributed to Boss Woman, in the midst of a “transitional year,” according to Wolff, and the remaining amount, $1.8 million, to projected losses in U.S. sales this year.
The troubled women’s division is now expected to break even in the second half of 2003, and perform profitably over a whole year for the first time in 2004.”