STRATEGY CLASH SAID TO PROMPT BRUSONE EXIT
Byline: Samantha Conti / Luisa Zargani
MILAN — Step aside LVMH and Gucci Group: For the moment, the only partner in Giorgio Armani SpA’s future appears to be Armani himself.
The designer doesn’t want to sell any part of his company right now, sources close to the fashion house say, and that’s one reason his managing director Pino Brusone has decided to move on.
Meanwhile, WWD has learned that Brusone ended his tenure with a bang, sealing a deal to buy two factories from licensee GFT as part of a plan to terminate Armani’s men’s wear agreement and take production of two men’s lines in-house.
A spokesman for GFT’s parent, Holding di Partecipazioni Industriali, declined to comment on the sale. An Armani spokesman said: “Discussions regarding the future of our relationship are proceeding in a positive and constructive manner.”
As reported, Brusone will be leaving Armani June 30 after 14 years on the job. Brusone’s exit is widely perceived to be an amicable one, and sources said he and Armani are conducting business as usual.
Although Brusone could not be reached for comment and the company declined to comment further on the resignation, sources here reiterated that Armani and his right-hand man repeatedly locked horns over strategy: Brusone wanted to sell to Gucci Group or LVMH Moet Hennessy Louis Vuitton, and Armani, apparently, was reluctant.
Some even said Brusone was getting a little too cozy with fashion executives at LVMH — and that Armani may have been feeling some pressure to sell. An LVMH spokesman declined to comment.
“Armani is under a lot of pressure now,” said a source close to both the designer and Brusone. “On a personal level, he is not ready to sell the company he spent 25 years building. Brusone, on the other hand, is a business brain and in this moment of mergers and acquisitions, he wants to strike while the iron is hot. One thing is for sure: Armani is clear-headed — he wants to ensure the future and continuity of the company. He will sell when the time is right — for him.”
Armani himself has spoken publicly — and as recently as last month — about a possible future alliance with LVMH or Gucci, although those who know him well say it’s just talk.
An Armani spokesman downplayed the designer’s comments, saying: “There’s nothing in the works, and no deadline [for a sale]. Mr. Armani is focused on his current work and business.”
Sources close to the company agreed that Armani is not ready to give up control of his company. “He still wants to be the center of control and attention,” said a source who has worked with the designer.
Back in 1997, Brusone was pushing to take the company public. When Armani scrapped that idea, Brusone started talking to LVMH and Gucci. Sources here even say Brusone hired Credit Suisse First Boston as a financial adviser and a scout for potential business partners. An Armani spokesman declined to comment on those reports.
Armani himself was very vocal in his praise of LVMH chief Bernard Arnault, and told WWD last year he was mulling the possibility of working with the French mogul. The two companies were said to have been in talks as recently as November, although spokesmen for LVMH and Armani denied the meeting.
Gianni Gerbotto, the deputy managing director, will temporarily replace Brusone — and sources said he may even be the successor.
Brusone has recently put in place a strong management team that includes Gerbotto, John Hooks, commercial and marketing director, and Paolo Fontanelli, financial director of the company. A source close to the company indicated that this team will be more than able to propel Giorgio Armani SpA into the future.
Sources say that in addition to sparring with Armani over strategy, Brusone was drained after 14 years on the job. “He wants a job with less pressure. He wants to start enjoying his life a little bit more,” said a source close to Brusone. “He’s tired, and he feels as if he’s completed a career cycle: He wants to move on.”
What a cycle it was. Brusone joined the company shortly after the premature death of Sergio Galeotti, Armani’s business partner and the man who pushed him to open the fashion house.
In the 14 years they worked together, Brusone helped turn Giorgio Armani SpA into one of Italy’s most profitable businesses, working his magic in a variety of divisions. He pulled Simint, Armani’s jeans manufacturer, from the brink of bankruptcy and transformed it into a company that posted sales of approximately $110 million in the first eight months of the fiscal year ending December 31, 1999. Profits rose $18.6 million in the same period. Dollar figures are converted from the lira at current exchange.
Giorgio Armani SpA is expected to post its 1999 year-end results next month. In 1998, net income reached approximately $135 million on direct consolidated sales of approximately $830 million.
On one side, Brusone built up Armani’s licensing business to include fragrances, eyewear and watches. Last year, sales of watches and fragrances generated more than 20 percent of the company’s overall wholesale revenue.
On the other side, Brusone dismantled a number of clothing licenses and, in tune with company strategy, began taking production in-house. Last year, he announced the termination of the Le Collezioni women’s license which GFT had produced since 1980.
Although neither Armani nor HdP would confirm the termination of the Giorgio Armani Uomo and Le Collezioni Uomo license, sources here said the deal is already completed. Armani will acquire two factories near Turin and hire half of their 1,400 workers. Brusone has already begun discussions with unions regarding future plans, the sources said.
Under Brusone’s tenure, Armani also ended its accessories license with Redwall and launched a new, wholly owned division that will design luxury leather accessories under the Giorgio Armani and Emporio Armani labels. The full collection will bow for the spring/summer 2001 season.
Brusone also helped build a worldwide network of freestanding Giorgio Armani, Le Collezioni, Emporio Armani and A|X Armani Exchange stores and helped plan the major retail complex on Milan’s via Manzoni that will house Emporio Armani, Armani Jeans and the soon-to-be launched Armani Casa line.
The store will open in September on the occasion of the 25th anniversary of the house.