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Gucci

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Gucci
Company typeSubsidiary of PPR (Euronext: PP)
IndustryConsumer Goods
Founded1921
Headquarters
Florence
,
Italy
Key people
Guccio Gucci, Founder
Robert Polet, Chairman, President & CEO
Alexis Babeau, CFO
Frida Giannini, Creative director
ProductsTextile - Apparel clothing
Revenue7.7 billion €
ParentPPR
Websitewww.gucci.com

The House of Gucci, better known simply as Gucci, is an Italian iconic fashion and leather goods label. It was founded by Guccio Gucci (b.1881 – d.1953) in Florence in 1921.[1] Gucci is considered one of the most famous, prestigious, and easily recognizable fashion brands in the world.[2] The House of Gucci belongs to the French conglomerate company Pinault-Printemps-Redoute (PPR).

Gucci generated circa US$7.7 billion worldwide of revenue in 2007 according to BusinessWeek magazine and recofirmed it 46th position of the previous year in the magazine's annual "Top 100 Brands" chart.[3] For this reason Gucci is the second biggest-selling fashion brand after LVMH. Most importantly Gucci is the biggest-selling Italian brand in the world.[4] Gucci operates about 425 stores worldwide and it wholesales its products through franchisees and upscale department stores.[5]

History of the Gucci

The House of Gucci (pronounced Guchi) was founded in 1921 by Guccio Gucci. In 1938, Gucci expanded and a boutique was opened in Rome. Guccio was responsible for designing many of the company's most notable products. In 1947, Gucci introduced the bamboo handle handbag, which is still a company mainstay. During the 1950s, Gucci also developed the trademark striped webbing, which was derived from the saddle girth, and the suede moccasin with a metal bit.

His wife Aida Calvelli had a large family, six children in all, though only his sons—Vasco, Aldo, Ugo, and Rodolfo—would play a role in leading the company. After Guccio's death in 1953, Aldo helped lead the company to a position of international prominence, opening the company’s first boutiques in London, Paris, and New York. Even in Gucci’s fledgling years, the family was notorious for its ferocious infighting. Disputes regarding inheritances, stock holdings, and day-to-day operations of the stores often divided the family and led to alliances. Gucci expanded overseas, board meetings about the company’s future often ended with tempers flaring and luggage and purses flying. Gucci targeted the Far East for further expansion in the late 1960s, opening stores in Hong Kong, Tokyo, and Korea. At that time, the company also developed its famous GG logo (Guccio Gucci's initials), the Flora silk scarf (worn prominently by Hollywood actress Grace Kelly), and the Jackie O shoulder bag, made famous by Jackie Kennedy, the wife of U.S. President John F. Kennedy.

Gucci remained one of the premier luxury goods establishments in the world until the late 1970s, when a series of disastrous business decisions and family quarrels brought the company to the verge of bankruptcy. At the time, brothers Aldo and Rodolfo controlled equal 50% shares of the company, though contributed less to the company than he and his sons did. In 1979, Aldo developed the Gucci Accessories Collection, or GAC, intended to bolster the sales for the Gucci Parfums sector, which his sons controlled. GAC consisted of small accessories, such as cosmetic bags, lighters, and pens, which were priced at considerably lower points than the other items in the company’s accessories catalogue. Aldo relegated control of Parfums to his son Roberto in an effort to weaken Rodolfo’s control of the overall operations of the company.

The AMC Hornet station wagon interior by Gucci

Aldo Gucci expanded into new markets including an agreement with American Motors Corporation (AMC). The 1972 AMC Hornet compact "Sportabout" station wagon became one of the first American cars to offer a special luxury trim package created by a famous fashion designer. The Gucci cars sported boldly striped green, red, and buff upholstery and on the door panels, as well as the designer's emblems and exterior color selections.

Though the Gucci Accessories Collection was well received, it proved to be the force that brought the Gucci dynasty crashing down. Within a few years, the Perfumes division began outselling the Accessories division. The newly-founded wholesaling business had brought the once-exclusive brand to over a thousand stores in the United States alone with the GAC line, deteriorating the brand’s standing with fashionable customers. "In the 1960s and 1970s," writes Vanity Fair editor Graydon Carter, "Gucci had been at the pinnacle of chic, thanks to icons such as Audrey Hepburn, Grace Kelly, and Jacqueline Onassis. But by the 1980s, Gucci had lost its appeal, becoming a tacky airport brand."

It did not take long before ravaged the company’s pomp by flooding the market with cheap knockoffs, further tarnishing the Gucci name. Meanwhile, infighting was taking its toll on the operations of the company back in Italy: Rodolfo and Aldo squabbled over the Parfums division, of which Rodolfo controlled a meager 20% stake. By the mid-1980s, when Aldo was convicted of tax evasion in the United States by the testimony of his own son, the outrageous headlines of gossip magazines generated as much publicity for Gucci as its designs.

Rodolfo’s death in 1983 caused a major shakeup in the company when he left his 50% stake in Gucci to his son, Maurizio Gucci. Maurizio allied with Aldo’s son Paolo to gain control of the Board of Directors and established the Gucci Licensing division in the Netherlands for purposes. (This action would later have a drastic impact on the outcome of the company’s dispute with the world’s largest luxury goods company, LVMH Moët Hennessy Louis Vuitton.) Following the decision, the rest of the family left the company and, for the first time in years, one man was at the helm of Gucci. Maurizio sought to bury the fighting that had torn the company and his family apart and turned to talent outside of the company for Gucci’s future.

Corporate Gucci

Gucci store at night.

A turnaround of the company devised in the late 1980s made Gucci one of the world's most influential fashion houses and a highly profitable business operation. In October of 1995 Gucci went public and had its first initial public offering on the AEX and NYSE for $22 per share. November of 1997 also proved to be a successful year as Gucci acquired a watch licensee, Severin-Montres, and renamed it Gucci Timepieces. The Gucci brand is considered one of the most frequently mentioned brands in music. The firm was named "European Company of the Year 1998" by the European Business Press Federation for its economic and financial performance, strategic vision as well as management quality.

Gucci world offices and headquarters are in Florence, Paris, London, and New York. PPR headquarters are in Paris.

United States Flagship Stores:

New management

In 1989, Maurizio managed to persuade Dawn Mello, whose revival of New York's Bergdorf Goodman in the 1970s made her a star in the retail business, to join the newly formed Gucci Group as Executive Vice President and Creative Director Worldwide. At the helm of Gucci America was Domenico De Sole, a former lawyer who helped oversee Maurizio’s takeover of ten 1987 and 1989. The last addition to the creative team, which already included designers from Geoffrey Beene and Calvin Klein, was a young designer named Tom Ford. Raised in Texas and New Mexico, he had been interested in fashion since his early teens but only decided to pursue a career as a designer after dropping out of Parsons School of Design in 1986 as an architecture major. Dawn Mello hired Ford in 1990 at the urging of his partner, writer and editor Richard Buckley.

In the early 1990s, Gucci underwent what is now recognized as the poorest time in the company's history. Maurizio riled distributors, Investcorp shareholders, and executives at Gucci America by drastically reining in on the sales of the Gucci Accessories Collection, which in the United States alone generated $110 million in revenue every year. The company’s new accessories failed to pick up the slack, and for the next three years the company experienced heavy losses and teetered on the edge of bankruptcy. Maurizio was a charming man who passionately loved his family's business, but after four years most of the company's senior managers agreed that he was incapable of running the company. His management had had an adverse effect on the desirability of the brand, product quality, and distribution control. He was forced to sell his shares in the company to Investcorp in August of 1993. Dawn Mello returned to her job at Bergdorf Goodman less than a year after Maurizio’s departure, and the position of creative director went to Tom Ford, then just 32 years old. Ford had worked for years under the uninspiring direction of Maurizio and Mello and wanted to take the company’s image in a new direction. De Sole, who had been elevated to President and Chief Executive Officer of Gucci Group NV, realized that if Gucci was to become a profitable company, it would require a new image, and so he agreed to pursue Ford’s vision.

Domenico De Sole was incensed by the news and declined Arnault’s request for a spot on the board of directors, where he would have access to Gucci’s confidential earnings reports, strategy meetings, and design concepts. De Sole reacted by issuing new shares of stock in an effort to dilute the value of Arnault’s holdings. He also approached French holding company Pinault-Printemps-Redoute (PPR) about the possibility of forming a strategic alliance. Francois Pinault, the company’s founder, agreed to the idea and purchased 37 million shares in the company, or a 40% stake. Arnault’s share was diluted to a paltry 20%, and a legal battle ensued to challenge the legitimacy of the new Gucci-PPR partnership, with the law firm of Skadden, Arps, Slate, Meagher & Flom representing Gucci. Courts in the Netherlands ultimately upheld the PPR deal, as it did not violate that country's business laws. The second largest shareholder is Crédit Lyonnais with 11%. As of September 2001 a settlement agreement was put into place between Gucci Group, LVMH, and PPR. 2001 was also an incredible year for the Gucci Group as it acquired percentages of Bottega Veneta, Di Modolo, Balenciaga, and formed a partnership with Stella McCartney.

Ford leaves Gucci

After a failed attempt at contract renewal with PPR in 2003, Tom Ford and Domenico de Sole decided to take their leave from Gucci Group. Ford’s last show for Gucci returned to the roots of his first successful collection: the culture of celebrity. Print advertisements featured models in sleek, simple gowns inspired by the glamour of 1920s silent film stars. Ford priced up the ready-to-wear and used exotic fabrics like alligator and boar hide. His collection for Yves Saint Laurent followed the lead of the previous season’s Gucci women’s wear, with form fitting kimonos and Asian patterned dresses, while the menswear collection featured classic-looking tuxedos and smoking jackets. The announcement of his departure led to a complete presale of many items in New York department stores, and waitlists for his last accessories formed just days after the collection showed in Milan. In 2005, Tom Ford began designing a line of cosmetics for Estee Lauder, and planned to launch his own line of ready-to-wear and accessories under a Tom Ford label.

Current creative team

Following Ford's departure, Gucci Group retained three designers to continue the success of the company's flagship label: Alessandra Facchinetti and Frida Giannini,[6] all of whom had worked under Ford's creative direction. Facchinetti was elevated to Creative Director of Womenswear in 2004 and designed for two seasons before leaving the company after a management dispute. Ray served as Creative Director of Menswear for three years before resigning in January 2006, citing his inability to create a consistent image for Gucci during his time as head designer. 32-year-old Giannini, who had been responsible for designing men's and women's accessories, currently serves as Creative Director for the entire brand. Giannini's Spring 2006 collection was lauded for its color and energy, recreating the buzz around the company's ready-to-wear that was first heard after Ford's 1995 season. Giannini's collections have thereafter departed from Ford's erotic 1990s looks. Even her fall-winter 2006 collection, with its sky-high hemlines and revealing necklines "wasn't quite Tom Ford's all-out orgy of glamour", as a review on Vogue magazine's website stated.

Cultural references

Because of its iconic status, Gucci is frequently mentioned in popular culture. With the onset of "designer label" culture in the mid to late 1970s, an early reference to Gucci in a pop song was He's The Greatest Dancer by Nile Rodgers and Bernard Edwards, 1979. It was performed by Sister Sledge. "The champion of dance, his moves would put you in a trance, and he never leaves the disco alone... He wears the finest clothes, the best designers, heaven knows, from his head down to his toes: Halston, Gucci, Fiorucci. He looks like a still, that man is dressed to kill..."

In hip-hop music, where rappers often name-drop to brag about their lifestyles of luxury,[7] Gucci is frequently mentioned.[8] In 2003, Gucci was the third most mentioned brand in Billboard top 20 singles, with appearances in 47 different songs.[8] Some critics claim that lyrical references to products are actually paid endorsements.[7]) Songs in which Gucci is mentioned include Combination by Aerosmith; Add It Up by The Kinks; Gucci Time by Schooly D, I Know What You Want by Busta Rhymes and Mariah Carey; Jigga That Nigga, Oh My God, and Poppin' Tags by Jay-Z; Vapors and Groupie Luv by Snoop Dogg; Why You Hurt Me by Missy Elliott; P.I.M.P. by 50 Cent; Let's Get Down by Bow Wow; Favorite Things by Big Brovaz; Hell Yeah by Ginuwine; Paranoid Android by Radiohead; The Fad by Chevelle; Still Fly by Big Tymers; Big Poppa by Notorious B.I.G; High Rollers by Ice-T. One rapper uses Gucci in his stage name, Gucci Mane.

Gucci has also been mentioned in the movies Alfie, Pretty Woman, Pret a Porter, Troop Beverly Hills, Spiceworld: The Movie, Hannibal, The Wedding Planner, Maid in Manhattan, Hitch, Monster-in-Law, Legally Blonde, The Devil Wears Prada, Epic Movie and Sex and the City: The Movie. But also in the Italian film I Mitici - Colpo Gobbo a Milano. Cleavon Little's Sheriff Bart is seen riding with Gucci saddlebags in Blazing Saddles. Gucci was also mentioned in the last season of Friends in the episode The One With Princess Consuela. Gucci was mentioned frequently in the first season of the TV series Ugly Betty.

The word "Gucci" is used adjectivally in the British Army to describe items of kit bought by individual soldiers as being superior to the issued equivalent. [3]

Brands

Using the capital obtained from the PPR issue, the Group has steadily expanded beyond just the Gucci brand through a series of takeovers. As of 2004, the Gucci Group maintained whole or partial interests in the following companies or brands:

Eau de Parfum II

Record

Guinness World Records cites the Gucci "Genius Jeans" as the most expensive jeans in the world. A pair of Gucci jeans that had been distressed, ripped and covered with African beads, when they debuted in October 1998 in Milan, were priced at US$3,134.[9]

See also

References

Spring 2009 collection

  1. ^ Gucci Group corporate history web pages, Retrieved on June 16 2007.
  2. ^ Promotion-type web page, Retrieved on June 16 2007.
  3. ^ [1].
  4. ^ [2]
  5. ^ Gucci Group NV: Information and Much More from Answers.com
  6. ^ Gucci official page for its creative Director, Retrieved on June 16 2007.
  7. ^ a b Kiley, David. Hip Hop Two-Step Over Product Placement BusinessWeek Online, April 6, 2005, accessed January 5, 2007
  8. ^ a b Microsoft Word - 3FFC3A15-64F0-10D886.doc
  9. ^ Yara, Susan, "The Most Expensive Jeans" Forbes magazine, November 30, 2005, Retrieved on June 16, 2007.
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