PARIS — Mark Lee is trading his Yves Saint Laurent lace-ups for Gucci loafers.

The formidable YSL executive, who spearheaded a radical and costly overhaul of the French fashion house, will succeed Giacomo Santucci as president and managing director of the $1.9 billion Italian firm, effective Nov. 2.

Moving swiftly to fill a key vacancy — and perhaps stem a further drain of talent from its cash-cow brand — Gucci Group announced Lee’s appointment Monday.

It came less than a week after Santucci’s employment was “terminated” amid accusations of disloyalty, and only a day after employees were informed of the forthcoming exit of Tom Mendenhall, who resigned as Gucci’s worldwide merchandising director; it is believed he will join Abercrombie & Fitch in a senior management role. There, Mendenhall will work with Robert Singer, who resigned as Gucci Group’s chief financial officer this spring to become A&F’s president and chief operating officer.

In his new role, Lee, 41, reports to Gucci Group chief executive officer Robert Polet, who also continues as ceo of the Gucci brand. But sources indicated Lee ultimately will inherit the ceo title once Polet, former honcho of Unilever’s frozen foods division, gets better acclimatized to the luxury industry.

Meanwhile, another Gucci Group veteran, James McArthur — who oversees the Stella McCartney, Alexander McQueen and Balenciaga brands — will succeed Lee at YSL in an interim capacity.

In a statement, Polet characterized Lee, who first joined Gucci in 1996 as worldwide director of its ready-to-wear business, as an “obvious” choice.

“He combines a rare set of skills developed over eight years at Gucci and Yves Saint Laurent: brand and product sensitivity, retailing experience, merchandising talent and great leadership and vision,” Polet said. “All of these skills were evident during his nearly five years at the helm of Yves Saint Laurent, and they are just what Gucci needs to maintain its position on the cutting edge of luxury.”

A slim and unassuming man, Lee has a reputation as a strong merchant and a dynamic leader with an airtight grasp on all aspects of his business. And although he was a key protégé of former Gucci Group ceo Domenico De Sole, Lee has been a deft survivor of the corporate upheaval that saw De Sole and designer Tom Ford exit as full ownership of YSL and Gucci fell to French retail conglomerate Pinault-Printemps-Redoute.

This story first appeared in the October 26, 2004 issue of WWD. Subscribe Today.

“All of this came up rather suddenly,” Lee confessed on Monday. “I was completely focused on YSL and moving YSL forward.”

And while Lee has strong ties to the French house, and aimed to steer it out of the red, he said he’s not alarmed about its long-term prospects.

“I’m not concerned because YSL remains a really great brand and there’s a fantastic team of people at YSL in Paris and all over the world that are really competent on both the creative and management sides,” he said. “It’s sad and it’s a change, but YSL will go forward.”

Born and raised in San Francisco, Lee began his fashion career at Saks Fifth Avenue in 1984 as an assistant buyer of European designer collections. He went on to work for Cidat U.S.A., the firm that handled U.S. distribution of some Valentino lines, before joining Giorgio Armani for a five-year career, rising to commercial director of its U.S. arm. After that he worked at Jil Sander America Inc. as managing director before joining Gucci.

Lee was named president of YSL in November 1999 and imposed De Sole’s famous direct-control mantra for production and distribution, terminating more than 150 licensing pacts and setting out to build a global network of boutiques.

Sales in directly owned stores grew almost fourfold in 2003 to 90 million euros, or $101.9 million, while wholesale volume doubled to 48 million euros, or $54.3 million, converted at average exchange rates.

But the attempt to engineer a Gucci-esque rejuvenation drove the company deeply into the red. Operating losses at YSL in 2003 widened to $94 million, or 76.4 million euros, and no timetable has been set to reach break-even.

Critical of an inordinate focus on eveningwear and other decisions made during the Ford era, Lee recently unveiled a strategy based on growing sales by diversifying the product offering and capitalizing on such YSL icons as safari jackets, pantsuits and even logos.

One source suggested the brand would continue to flounder, given that designer Stefano Pilati, who succeeded Ford, received poor reviews for his runway debut earlier this month.

“Mark is an excellent manager, and critical in turning around YSL,” said the source. “He is key to the brand. Keep in mind that YSL doesn’t have a very seasoned designer, which is why the brand needs Mark’s leadership right now. It is not the time to pull Mark away.”

Industry sources agreed Gucci Group is likely to have to look beyond YSL to find Lee’s successor, and that the search would likely be a lengthy one.

Meanwhile, an upbeat mood prevailed at Gucci, given that Lee is already a known and respected commodity to many inside the company, including top regional managers in America, Japan and Asia.

“Mark is an insider, he’s from the luxury business and everyone knows him,” said one employee, who also praised Polet for decisive action in the face of Santucci’s sudden exit.

A union source at Gucci’s plant in Scandicci, Italy, agreed Lee made a good impression from past dealings. He added that Polet is slated to speak to all employees today to outline strategy going forward.

— With contributions from Alessandra Ilari and Amanda Kaiser, Milan and Samantha Conti, London

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