History of the Gucci house

Like many other high-fashion companies, Gucci began as a small, family-owned saddlery and leather goods store. Guccio Gucci was the son of an Italian merchant from the country’s northern manufacturing region. As a young man, he travelled to Paris and London, where he "gained an appreciation of cosmopolitan culture, sophistication, and aesthetics." Gucci opened his first boutique in the family’s native Florence in 1921 and quickly built a reputation for quality, hiring the best craftsmen he could find to work in his atelier. 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.

Guccio and 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. As the 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 and Tokyo. 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 Aldo felt that his brother 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.

Though the Gucci Accessories Collection was well received, it proved to be the destabilizing force that brought the Gucci dynasty crashing down. Within a few years, the Parfums 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 didn’t take long before counterfeiters 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 tax 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

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. The Gucci brand is considered one of the most frequently mentioned brands. 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.

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 creative director. At the helm of Gucci America was Domenico De Sole, a former lawyer who helped oversee Maurizio’s takeover of the company and the purchase of the company’s remaining shares by Investcorp, a Bahrain-based holding company between 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 Mellow and wanted to take the company’s image in a new direction. De Sole, who had been elevated to CEO, 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.

Tom Ford

Ford had long been an avid follower of two of America’s top designers, Ralph Lauren and Calvin Klein. Klein, much like Ford, was a “superstar designer,” the exemplar of his own brand: stylish, suave, and modern. His scandalous advertisements made the brand synonymous with eternal youth and the mystery of adolescent sexuality. Lauren, as Ford described, was “the only designer to really create an entire world… you know exactly what his people look like, what their houses look like, what kind of cars the drive,” a mantra he would adopt at Gucci years later. But where Ralph Lauren embodied the WASP culture of New England, Ford created a lifestyle brand for the hedonistic, urban-dwelling fashionistas who emblemized the brand in years past.

Ford's 1995 ready-to-wear line for Gucci dazzled fashion critics. The collection was reminiscent of the jet-set clientele that created a buzz around the label in the 1970s, with its unbuttoned silk shirts and tight velvet hip-huggers. "It was hot! It was sex!" Joan Kaner, fashion director for Neiman Marcus, exclaimed. "The girls looked like they had just stepped off someone’s private jet. You just knew that wearing those clothes would make you look like you were living on the edge—doing it and having it all!"

While Ford’s 1995 ready-to-wear line was met with rave reviews by industry insiders, it was the celebrity following that would propel Gucci back to the top of the industry. In 1995, Madonna appeared at the MTV Video Music Awards to collect an award for “Take A Bow” in head-to-toe Gucci. Soon thereafter, Gwenyth Paltrow graced the red carpet in the season’s signature look, a red crushed velvet tuxedo with an unbuttoned blue dress shirt, and British actress Elizabeth Hurley donned that season’s patent leather spiked boots to a movie premiere. Celebrities, fashion models, and wealthy young patrons around the world were clamoring for pieces from the new collection. In the years that would follow, nearly every major celebrity in Hollywood came to Ford for formalwear on awards night, and celebrity sightings once again became commonplace in the company’s boutiques.

Gucci’s warm reception among the glitterati had an unintended side effect: the elevation of Tom Ford from designer to sex symbol. Practically overnight, Ford became one of the most celebrated new stars in entertainment. He graced the pages of entertainment and fashion magazines alongside advertisements that featured his company’s sexy new look. People Magazine called him one of the 50 most beautiful people of the year. The defining characteristic of Ford’s work was what came to be known as the “Gucci sex factor.” His spring 1996 collection, which was reminiscent of the flower child fashions of the early and mid-1970s, continued Ford’s signature trend of sky-high hemlines and plunging necklines. By his third collection, it became clear that the highly suggestive advertisements and scanty clothing were not passing fads at the generations-old fashion house, but rather the attribute that would set Gucci apart from its competitors.

Gucci Group became a publicly traded company in 1995, incorporated in the Netherlands, and listing on the New York and Amsterdam Stock Exchanges. It issued further shares in 1996.

LVMH Takeover Attempt

In the late 1990s, Gucci became mired in a standoff with one of fashion's biggest conglomerates, LVMH Moët Hennessy Louis Vuitton. Just before Gucci Group’s IPO in 1995, Investcorp approached LVMH chairman Bernard Arnault with a proposition to sell him the entire Gucci brand, including its lucrative watch and fragrance divisions. Arnault balked at the $500 million price tag and was unsure that Gucci could ever be revived. Four years later, he sorely regretted that decision. Prada, in an effort to replicate LVMH's success at consolidation, had purchased a sizeable stake in Gucci Group in an ill-fated attempt to take over the company. Realizing that his company didn't have the assets to execute the takeover, Prada’s Patrizio Bertelli offered to sell the shares to someone who could: Arnault. Arnault jumped at the chance. In 1999, LVMH staged an effort to acquire Gucci Group through a creeping takeover, purchasing 34.4% of the company’s stock.

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. Courts in the Netherlands ultimately upheld the PPR deal, as it did not violate that country's business laws. PPR now owns 68% of the group. The second largest shareholder is Crédit Lyonnais with 11%

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.

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:

• Fashion
  • Gucci (100% share of ownership, also watches 100%)
  • Yves Saint Laurent (100%, also perfume brand 100% and watches brand 100%)
  • Sergio Rossi (70%)
  • Bottega Veneta (78.5%)
  • Alexander McQueen (51%, also perfume brand 100%)
  • Stella McCartney (50%, also perfume brand 100%)
  • Balenciaga (91%)

• Perfume
  • Roger & Gallet
  • Boucheron (also jewelry and watches)
  • Ermenegildo Zegna
  • Oscar de la Renta
  • Van Cleef & Arpels
  • Fendi

• Watches
  • Bedat & Co (85%)

See also

• List of Italian companies
• Haute couture
• Luxury good
• Prada
• Versace
• Armani
• Santi Gucci