The Future of Armani
Giorgio Armani single-handedly built a billion-dollar brand his own way, but where does his empire go from here?
By ALESSANDRA GALLONI - Wall Street Journal Magazine
It was Giorgio Armani's obsession with health that led to his brush with death. For 10 days in May 2009, Armani, one of the most influential fashion designers and entrepreneurs of our time, lay in a hospital bed with what he describes as "a very serious" case of hepatitis. The cause of his illness wasn't the stress that comes from juggling a global empire of clothes, accessories, furniture, cosmetics and real estate. It was the supplements. Then 75 years old, he was drinking them every morning in a small glass as he hit the gym. "My doctor told me: Get rid of all this shit you're drinking," Armani recalls.
Armani won't say exactly what he was taking, only that the substance poisoned his liver. Why he was taking it, however, is clear: The house Armani has built is a reflection of himself—the trim, toned, tanned and T-shirted figure that is synonymous with the brand—and he wants to secure a long life for both.
Few people in the fashion world are as entwined with their brands. In most companies, a creative director designs and an executive manages. Armani does both. Many important designers, including Karl Lagerfeld and Marc Jacobs, work under contract for brands that aren't their own. Armani hasn't designed for anyone else in more than 30 years. Most houses are owned by large conglomerates, and for those that still belong to their founding families, ownership is usually shared. Armani owns 100 percent of Giorgio Armani SpA.
Armani takes full responsibility, and credit, for anything that bears his name. At a meeting last year about a new Armani-branded hotel in Marrakech—hotels are the designer's latest big venture—Armani sparred with the architect Jean-Michel Gathy over the layout of the rooms. "This bathroom is too big. It's a bathroom with a house on the side," Armani said in French. "I tell you this is a beautiful room. You can walk around naked, and no one will see you," insisted Gathy. "You don't need to walk around naked every day," snapped Armani. "This is too structured, too busy. I want simplicity, simplicity." The layout has since been changed.
Gathy says that when he was negotiating his contract to design the hotel, Armani did not want him to be publicly recognized as the architect. Gathy, who has designed many luxury hotels worldwide, had to persist for several months before Armani backed down. (Armani did not comment on Gathy's contract.) "He's a control freak," says Gathy. "But that's what it's like to work with Armani. He's the old man, the icon, the alpha male in the room. And that's no problem."
The Armani way has bred huge success. The Italian designer revolutionized the wardrobes of professional women in the 1980s, taking them out of floral skirts and putting them into chic, deconstructed pantsuits in elegant neutral colors. He unleashed the marketing power of Hollywood and introduced high fashion to the red carpet. His company's unified direction and financial heft—it had $800 million in cash on its books as of 2010—have allowed it to remain independent, even as much of the world's fashion business has coalesced into the hands of two large French corporations. People trained at Armani are among the best recruits in the fashion business, according to executives at rival firms. More than $8 billion worth of Armani products was sold around the world in 2010. He is worth $7.2 billion, according to Forbes, and owns nine homes and two yachts.
"Giorgio is one of the few designers in the world who has always understood consumers," says Gabriella Forte, a consultant for Dolce & Gabbana who was a top executive at Armani for nearly 20 years. "His brand isn't only about fashion; it's bigger than that."
Yet Armani, who turns 78 in July, looms so large over his company that it's hard to imagine a future without him. Over the past two decades, Armani has flirted with the idea of a stock market listing and once even thought about selling a stake to LVMH Moët Hennessy Louis Vuitton SA. "But he could never bring himself to do anything. Selling would have been like breaking his toy," says Paolo Fontanelli, who was chief financial officer of Armani in the 2000s.
By Armani's own estimation, the current management team is small and hasn't been in place for long. Only a couple of top managers are permitted to speak for the brand, largely because Armani doesn't trust others to do so. Some top executives who have left over the past few years say they felt there was limited upside career potential. "Giorgio Armani SpA has become huge, and there are few people managing it," says Armani. "I wouldn't say these people are on trial, but they haven't yet earned closeness" to his inner circle.
Armani sees his business eventually in the hands of this group he calls I Fedeli, or the faithful. It includes his two nieces and his nephew—Silvana and Roberta Armani, the daughters of his late older brother Sergio, and Andrea Camerana, the son of his younger sister Rosanna—as well as Pantaleo Dell'Orco, known as Leo, a former model who has been a collaborator and friend of Armani's for 20 years. The 57-year-old Silvana, reserved and understatedly elegant in her slacks, button-down shirt and ponytail, started out as a model and swimwear designer for her uncle in the 1970s, and today oversees the women's collections. Armani sometimes pulls her with him onto the runway. "Two or three times, we've been backstage, he's grabbed my hand, said, 'Put on some makeup,' and taken me out with him for a bow," says Silvana. Dell'Orco, 59, is her counterpart for menswear. Together, they are probably closer to the designer than anyone else. And though he has ceded a great degree of creative control to both of them, when there are disagreements—and there are many—Silvana explains: "In the end, he's always right."
Roberta, 41, is a tall, gregarious figure with a mane of wavy brown hair who also started out as a model for her uncle and now manages events and red-carpet affairs. Often photographed towering affectionately over Armani, she has become the second-most-recognizable face of the brand. The 42-year-old Camerana joined Armani 12 years ago after cutting his teeth in the food industry. Holding the title of director, he works with Armani on the business side and describes his work as "smoothing over frictions between Armani and his managers." Camerana says that his family is working on strengthening the company's internal organization "so that it will work, whatever happens."
Yet at their biweekly office meetings, or over weekend family lunches at Armani's country villa in Broni, south of Milan, discussing tomorrow remains difficult. "There won't be a single new genius, or new Armani. Rather, there will be lots of little Armanis," says Silvana. "We can't talk about succession with him. It's like saying, In a while you'll no longer be here. It's terrible. Talking about it would be terrible."
Armani readily admits he wouldn't be where he is without the help of another man, Sergio Galeotti, a tall, mustachioed architectural draftsman from Italy's Tuscan coast with whom the designer became romantically involved in the mid-1960s. At that point, Armani had worked as a window dresser and buyer at Milan department store La Rinascente and was designing for Italian menswear house Cerruti. A decade younger than Armani, Galeotti was a bon viveur and free spirit who became an energizing force for the aspiring designer. "He woke me up from a sort of torpor, from the little life in which I was living," recalls Armani.
As they began to think about forming a business, Galeotti and Armani toyed with the idea of teaming up with Walter Albini, then an Italian designer who was becoming famous for his luxury women's sportswear. But even at that early stage, Armani feared someone stealing his spotlight. Moreover, he wanted to design for women, which was and still is a bigger business than designing for men. The couple dropped the idea, and in 1975 they started their own label. Galeotti, then 30, would manage from behind the scenes. Armani, 40, would be the creative mind—and face—of the brand.
In those years, Galeotti worked tirelessly to launch and burnish Armani's image. One day Armani was heading to a textile fair in Como, a lakeside town north of Milan, when he found a Rolls-Royce parked outside his Milan home. "We had no money at the time, and yet Galeotti had rented it for me," recalls Armani. "He said, 'You can't go to this fair in any old car.' It just goes to show how much he really wanted me—not him—to shine." Armani soon settled into the relaxed but refined style for which he would become famous. Though he had been influenced by the more structured looks of French couturiers, such as Yves Saint Laurent and Chanel, Armani saw his fashion as transcending fantasy. "I wanted to dress the woman who lives and works, not the woman in a painting," he says.
The late 1970s and early 1980s began a period of huge expansion for Armani and Galeotti. They forged a licensing agreement with one of Italy's biggest manufacturers at the time, Gruppo Finanziario Tessile (GFT). In 1979, Giorgio Armani Corp. was founded in the U.S., and soon after, the company signed a licensing agreement for beauty products with L'Oréal and opened the first Emporio Armani store in Milan.
The real turning point came when Fred Pressman, owner of Barneys New York, took notice. The department store placed a large order and launched a major ad campaign that shot the Italian designer's look into households across the U.S. Armani's increased visibility ricocheted to Hollywood, where filmmaker Paul Schrader asked him to design John Travolta's wardrobe for his new film, American Gigolo. As the famous story goes, Travolta dropped out and Richard Gere played the role, providing Armani with the perfect pin-up for his sleek suits. This was years before cinema product placements became a carefully studied marketing strategy for fashion houses—and for Armani it was a major coup.
Success brought fame and riches. In Italy, which was reeling from bloody ideological battles of left-wing terrorist groups in the 1970s and '80s, Armani was hailed as a sign of economic renaissance. "Like my brother Gianni, Giorgio brought Italy into all the most beautiful corners of the world," says Santo Versace, brother of the late designer and chairman of the eponymous brand. Armani and Galeotti bought a holiday home on the island of Pantelleria, off Sicily, and the country villa south of Milan. And they moved their offices to Via Borgonuovo 21, a palazzo just minutes from the city's most high-end shopping district, which would subsequently become Armani's home.
But at the height of Armani's success, Galeotti was struck with leukemia. In 1985, for several months, he lay first in a hospital bed in New York City and then in a room at the luxurious Hôtel de Crillon in Paris, while Armani scrambled to keep the business afloat, which included preparing his ever more anticipated collections. "Can you just imagine what people were thinking when they knew that Galeotti was in a hospital bed in New York and that he had no chance of survival?" says Armani. "But I had to go on. I had to prepare the show." After presenting his women's collection in February of 1985 in Milan, Armani rushed to Paris with a videotape to show Galeotti. "At the end of the cassette, all he said was, 'Thank you, thank you, thank you,' " recalls Armani. Galeotti died in August. "It was the most difficult moment of my life," says Armani. "When Sergio was gone, everything was gone." John Hooks, who was working at GFT at the time and would later become one of Giorgio Armani SpA's top executives, says that most people at Armani's manufacturing partner believed that Galeotti's death would spell the end of the fashion house. "No one thought Armani could do it by himself," recalls Hooks. "It took sheer guts."
Instead of shriveling up, however, Giorgio Armani SpA expanded. The company entered Asia, via Japan, and launched new product categories, such as jeans, sunglasses and leather accessories. It opened new stores for different lines, including an Armani Exchange location in New York City and Armani Collezioni stores in Milan, London and Tokyo. The designer also made his first forays into the lifestyle business, with cafes and restaurants.
It was then that he caught the attention of LVMH chairman Bernard Arnault, who throughout the 1990s was creating an empire by buying out distressed family-owned fashion houses that were running out of cash to grow their businesses. In 1998, according to both sides, Arnault and Armani began to discuss a possible partnership in which the designer would have remained creative director and LVMH would have taken a 20 percent stake in the business. But nothing ever took shape. "I would have been managed," says Armani. "And so I thought to myself, If they want, they can go over my head."
Determined to remain independent, Armani set out to expand his production capability. Until then, Armani had largely outsourced the manufacturing of clothes, shoes and handbags. Between 2000 and 2005, the company bought out many of its old partners, including GFT and a group of shoemakers in the industrial area near Venice. It then expanded in Asia, opening 35 boutiques in China over the course of two years, and built a megastore in Milan that houses several Armani labels and is an outpost of high-end sushi mecca Nobu. He also enlisted Japanese architect Tadao Ando to design a 558-person theater, named Teatro Armani, in which to stage his men's and women's fashion shows, and created Armani Casa, a furniture business that adapts the designer's sleek, minimalist lines to sofas, tables and other interior designs.
By the mid-2000s, Armani had been in the ready-to-wear business for more than 30 years, and his label covered everything from suits to underwear. What was missing, he says, was "intense luxury, the way the French do it." So in 2005, he launched Armani Privé, an haute couture line of evening wear, with prices starting at $35,000, which shows in Paris alongside houses such as Dior and Givenchy.
A year later, Armani teamed up with Emaar Properties, a Dubai-based real estate developer, to build eight luxury hotels under the brand's name. So far two—in Dubai and Milan—have opened. Marrakech is slated to open in 2015. It is expected, according to Gathy, the architect, to include a 13-foot-wide river meandering through the desert sands, gardens and villas. Those around him agree that the hotels are perhaps Armani's most ambitious project yet. "They are a monument to his fashion, a path to immortality," says Roberta.
On a sunny afternoon last summer, Armani visited the half-constructed suites and roof-terrace spa of his hotel in Milan, which opened in November. "Fashion comes and goes, but all this remains," said Armani as he climbed seven flights of stairs without ever pausing to catch his breath. At the top, he looked out to admire the view and suddenly stopped, visibly irritated. "Is that the Mandarin?" he asked the engineer, who quickly assured him, "Yes, but don't worry. It doesn't have any of the view or the light we have here."
The Armani business does have some weaknesses. Armani himself acknowledges that he never developed a strong accessories collection. That has meant missed financial opportunities. The business hasn't grown as fast as many of its rivals over the past few years, especially in North America and Europe. In 2011, Armani's operating profit was $373 million and its revenue was $2.4 billion. Armani says the 13.6 percent rise in its sales last year was well above its historical average, but rival companies regularly hit double-digit sales increases.
Another concern is that as the company has added new lines—such as Armani Jeans, AX and Armani Collezioni—it has become harder to keep their identities distinct. Armani and Hooks, one of the designer's closest managers for a decade, were sometimes at odds over whether to open megastores that brought them all under one roof. Armani says he felt that Hooks wasn't aggressive enough in pushing the retail strategy. Hooks says he believed that merging the lines into single stores "dulled the edge and diluted the message."
The designer had been planning to revisit the retail strategy before he got sick in 2009. Upon returning to work at the end of the year, Armani shook up his management team with the aim, he says, of reinvigorating the brand. He made Hooks deputy chairman, with a more strategic rather than operational role, and Livio Proli, who worked at a company subsidiary, was named general manager. (Armani did not allow Proli to be interviewed for this article.) But 18 months after the changes, Hooks left, in part because of what he says was "a worrying trend by the new management to concentrate their efforts on more accessible collections." Hooks's departure was a personal disappointment to the designer. "Hooks didn't accept the change," says Armani. "But I am sad he is no longer here. He was my window on the world."
Armani is also in a perennial tug of war with the fashion establishment, which tends to exalt the more tormented or intellectual work of designers like the late Alexander McQueen, Louis Vuitton's Marc Jacobs and—much to his irritation—Miuccia Prada. They criticize him for not unveiling anything new. Armani is proud that 99 percent of his runway wares can be found in stores, and says editors should pay more attention to what consumers want than to what looks good on a magazine cover. Massimiliano Finazzer-Flory, Milan's former head of cultural affairs and a friend of Armani's, says that unlike many designers, Armani creates without pretending his fashion is art. "Armani is not an artist," he says. "He is an artisan in the true sense of the word. He believes in the art of doing." Yet like anyone in a creative business, says former Armani executive Forte, Armani is sensitive to "always being considered at the top of his creativity." That's why, despite his nearly 40 years under the spotlight, last February, Armani was back on the runway, subjecting himself to the flood of judgment that a 10-minute fashion show can bring.
An hour before his Emporio Armani presentation, the designer slipped on a pair of plastic shoe covers and stood on the pristine white runway to give the 70-odd models his ritual pep talk. "Don't walk like ostriches. Be elegant. Be happy," he ordered in Italian into his microphone, as his personal assistant Paul Lucchesi translated into English. "Smile!" he added, a request almost never made of models. Minutes before the show, Armani was still fussing with the looks, straightening the blue Basque hats and exchanging capes and coats. Silvana walked off, muttering under her breath to a colleague, "I can't believe it. He is pinning on every single hat. He is still making changes." During the show, the designer stood behind the curtain, delicately holding each model's hand as he nudged her out. With the last, he checked his hair in a small mirror as Lucchesi spritzed some Bois d'Encens perfume—Armani's favorite—over his head and then walked onto the runway.
A few days later, Armani was in the third-floor living room of his Via Borgonuovo palazzo with Lucchesi, who is tall, handsome and extremely protective of his boss. Armani says, "He is the person who makes me feel reassured because he thinks for and like me." That morning, Armani was wearing a gleaming white shirt, navy blue jacket and black trousers made with a blend of polyester, a fabric he likes to remind people he made cool again in the '90s.
The three-story palazzo is one of the designer's nine homes—which include apartments in New York City and Paris, and villas in Antigua and Saint-Tropez. It is the place where Armani spends most of his time, especially after cutting back on travel and events following his 2009 illness. The home is grand in its architecture—with a winding staircase between the first and second floor; a series of large bay windows leading to a terrace; and a private cinema. But it has an understated interior that is curato, or polished, as Armani likes things to be, and comfortable. The colors—beiges, grays, taupes—are also characteristic of the designer's palette, and most of the furniture, such as a round wooden dining-room table and a lacquered black bookshelf, is influenced by the simple lines and textures of 1930s and '40s Italian architecture.
Two large onyx panthers stand in the entrance, and there's a larger-than-life statue of a Roman god in his gym but no expensive artwork on the walls. (Armani says he believes art belongs in museums.) Instead there are black-and-white photos of people he has worked with, such as Michelle Pfeiffer, and those dear to him, especially his mother Maria, nicknamed Mariú. Shelves and coffee tables display trinkets picked up around the world—an ivory elephant from India, a piece of volcanic rock from Pantelleria.
Like so much else around him, Armani's house is a reflection—literally—of himself. In his bedroom is a large photograph of him dressed in a tuxedo. In one of the bathrooms, there are photos of him at age 18 in a bathing suit, flexing his muscles. "I know, it's a bit megalomaniac. But I wasn't bad, eh?" he chuckles. In his mirror-paneled dressing room sit rows of neatly folded dark-blue sweaters and about three dozen jackets. "Though I wear only two," he says.
Sitting down, Armani returns to the role of fashion designers. Fashion makes no sense, he says, unless it serves the primary purpose of dressing people. Take, for instance, a winter collection made of organza because organza is trendy. "Well, that's absurd, because in winter it's cold and you can't go around naked," Armani says, rolling his R s the French way, which in Italian is a slight idiosyncrasy of speech that exudes an air of aristocracy. "This is a serious business," he adds. "This isn't a game. This is not just about fashion victims." Yet he chafes at not being a critical darling. "Why do I still care?" he continues. "Why do I put myself in a position to be cast aside or not considered as I would like to? Because I am a creative mind, because I still aspire to be one."
He says he thinks about succession every day, "when I wake up in the morning and when I go to sleep at night." There is a hint of remorse that he didn't work out a deal with LVMH. "Today the two companies together would be really something," he says. One option he's exploring is a foundation—similar to the Hans Wilsdorf Foundation behind Rolex—that would protect his heirs' financial holdings and provide strategic guidance. As he sees it, his nieces and nephew will need some support. "It's difficult to judge their capacity," he says. "I'd say they're about 70 percent there."
But then he stops short: "Look, this succession issue has been at my throat for at least 15 years. The question is always the same, and so is the answer: As long as I'm here, I'm the boss."
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