MILAN — After years of speculation, Giorgio Armani is speaking up about the future of the company he founded more than four decades ago. On Friday, the designer confirmed he had established the long-rumored Giorgio Armani Foundation which, while aiming to fund social projects, also ensures that his $3 billion fashion group will live on.
“I decided to create the Giorgio Armani Foundation in order to implement projects of public and social interest,” said Armani. “The foundation will also safeguard the governance assets of the Armani Group and ensure that these assets are kept stable over time, in respect of and consistent with some principles that are particularly important to me and that have always inspired my activities as a designer and an entrepreneur.
“These founding principles are based upon: autonomy and independence, an ethical approach to management with integrity and honesty, attention to innovation and excellence, an absolute priority to the continuous development of the Armani brand sustained by appropriate investments, prudent and balanced financial management, limited recourse to debt and a careful approach to acquisitions,” he added.
In a nod to questions hanging over future developments at the company he founded, Armani concluded: “With this decision, taken in the name of continuity and secured by the foundation and my heirs, I would like most of all to bring reassurance to all the people of the Armani Group who work with loyalty and passion and who have always had faith in me, as well as to all those who over the years have contributed to the long-lasting success of this company and to whom I shall forever be sincerely grateful.”
While vocal over the years about his aversion to sell, take on a business partner or publicly list the company, rumors about Armani contemplating forming a foundation emerged in 2012. At the time, the designer told WWD that the foundation was “only one of the possibilities.” He said he had defined the continuity of the company.
“I’ve had close collaborators for some time now that bring forward my work in the best of ways. The family, in addition, is integrated in the management of the company.” He also emphasized the priority to have “absolute independence. It is the element on which I have built my business and the last that I am willing to give up.”
In 2012, speculation was that the designer would decide how to appoint members of the board in way that would be fixed in time and that he would place the company’s shares into a foundation. Without a hereditary successor, the foundation’s administrators would call the shots.
A few days ahead of Friday’s announcement, images of Armani, 82, sailing off the coast of Formentera, Spain, were posted on Instagram.
Asked about his decision to opt for a foundation, Prof. Dr. Stefano Grilli, partner in the tax department at legal firm Gianni, Origoni, Grippo, Cappelli & Partners, explained that, since the designer has no children, he would have to designate heirs in his will and those heirs could also inherit shares in the fashion group.
“One thing is to manage a company, the other is to own it,” said Grilli. “With ownership, there is an ethical and social responsibility toward employees, and the foundation would allow to protect the employees from any strange idea the heirs could have [in regards to the company].”
Grilli said a foundation is fiscally equivalent to a trust, which would designate the managers based on criteria defined by Armani himself. In addition, the foundation would channel resources from dividends at the Armani company into philanthropic and social projects.
“The Armani Group would have no owner, and the Armani Foundation would have no owner. Shares of the Armani Group would be part of the foundation’s assets,” Grilli observed. The foundation would allow the Armani Group to continue to “live on, be prosperous and employ workers. It would protect the company from possible quarrels among heirs, who could also decide to sell the company to cash out.”
Riccardo Molesti, fiscal consultant and tax adviser, concurred with Grilli, saying the foundation is “a tool to avoid splitting up the inheritance. It protects the company assets and guarantees continuity to the business.”
Waving off any tax-related issue or concern in this choice, Molesti underscored that the foundation is “super partes [impartial] with respect to the interests of the heirs, who could also end up quarreling. Armani promotes the continuity of the company beyond himself.”
The foundation is also an appropriate tool for either a complicated or, conversely, a slim family structure. In Italy, founding partners sign a notary act to create a foundation. “Generally, other partners may later join the foundation, as long as they are accepted by the founding partners,” he said.
Armani isn’t the first luxury or designer brand to establish a foundation. Rolex founder Hans Wilsdorf set up a trust in 1944 after the death of his wife and called it the Hans Wilsdorf Foundation, placing his shares in the luxury watch firm in the trust. The objective of the trust is to perpetuate the company, although it also has a mandate for charity work. It is understood the foundation’s trustees are “custodians” and not owners or shareholders, and they decide how to reinvest the profits, and hire or fire managers.
The late Geoffrey Beene, who died of squamous cell carcinoma in 2004 at the age of 80, directed his estate to provide support for cancer research and in 2006, the company established the Geoffrey Beene Cancer Research Center at Memorial Sloan-Kettering Cancer Center. Since then, donations have exceeded $144 million. Beene’s foundation also funds 40 to 50 charities, including research for Alzheimer’s and heart disease, YMA scholarships, the CFDA Lifetime Achievement Award, programs for veterans, protection of women and children, and protection of animals.
In 2014, Armani’s nephew Andrea Camerana, a counselor and former licensing director at his uncle’s fashion house, left his operations role, but remained on the board. Armani at the time denied any friction with Camerana, who is the son of the designer’s sister Rosanna, who also works in the company. He was often mentioned as a possible successor to Armani as chairman of the group. Roberta Armani, who is the daughter of the designer’s late brother, Sergio, is actively involved in the company, in charge of the group’s relations with high-profile celebrities and often acting as Armani’s deputy on social occasions around the world as the face of the company. Her sister Silvana is part of the design team.
The future of the Armani company has been a topic of discussion for almost two decades.
In 2000, Armani denied Gucci was a suitor and rumors sparked that longtime managing director Pino Brusone had stepped down over what industry sources said was a conflict over future plans for the house. Brusone wanted to sell to LVMH Moët Hennessy Louis Vuitton or Gucci Group and Armani, apparently, was reluctant. A year earlier, sources said LVMH chairman Bernard Arnault and Armani were talking about an agreement but they both denied the speculation. Arnault’s attendance at Armani’s men’s show in January that year helped fuel the rumor. Back then, Armani conceded that a “joint venture” was “the most realistic option.”
In 2003, Armani also 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 during a keynote address at the International Herald Tribune’s luxury goods conference in Paris.
A year later, Armani said he couldn’t be bothered with an initial public offering and “whining shareholders,” so linking up with a major industry player made the most sense. “Even with a big multinational group that can provide financing, often [the managers] may not understand why you need to do a show that costs $2 million or you invest in a store on Bond Street that loses money. The problem is you have to put your business with someone who is in the [fashion] business,” he said at the time.
In 2008, Armani squelched persistent rumors that he had done a deal with beauty and fragrance partner L’Oréal and also said he would never sell to private equity investors, whose only interest would be “in taking the group public for financial gain.” “I don’t see why at the end of my life, I should let my blood boil because some [private equity] manager comes along and tells me I can’t do something,” he said then. “Unimaginable. It would be a very nasty personal end.”
In 2009, Armani revealed he had been diagnosed with hepatitis. When he jumped back into the business after having taken care of himself, he admitted he learned he had to start to “be more careful” and that “it was an occasion to think about [the future],” but no plan was ever made public. He has since continued to work tirelessly, in his staple meticulous and hands-on manner.
In 2011, Armani told German Weekly magazine Die Zeit: “There will be many small Armanis in my company to continue my work, but there will be no genius capable of taking on all of this. That would mean defrauding myself and my seriousness.”
Two years ago, asked about the company being a potential acquisition target, he said: “My name always pops us but it’s because my situation is curious and unique. I myself am curious. In the end, this is a small family and there is a group of people that are like family. The company is a family one. I don’t know if there will be a corresponding [situation after me].”