In 2002, Gucci did over €1.4 billion in business with 174 directly operated and 31 franchised stores, selling its brand of leather goods, shoes, ready-to-wear, ties and scarves, jewelry, eye wear and perfume. Its watches alone number at more than a dozen distinct models and are coveted items, generating millions in revenue.
The beginnings of the Gucci empire can be traced back to Florence, Italy, in 1921, when a man mellifluously named Guccio Gucci opened an exclusive leather and luggage shop to cater to a highbrow clientele. Early on, Gucci understood the importance of building a reputation for his brand and did so by stamping an identifier on many of his special edition creations, such as the brand’s trademark striped webbing. His products were a hit and quickly became status symbols synonymous with luxury.
After Gucci died in the early fifties, his sons Aldo and Rodolfo took the reins and lead the Gucci brand to iconic status. Fashionable celebrities such as Grace Kelly and Audrey Hepburn were counted among avid collectors. The Guccis took note of this popularity and expanded aggressively, opening stores in glamorous locations such as London, Paris and Palm Beach.
For all the glamour Gucci represented externally, a great deal of internal dissonance grew within the family. Aldo and Rodolfo each had two sons who began a tug of war over the company in the eighties, pulling the brand in different directions like customers at a factory sale. Aldo's son Paolo wanted more control over product development and got into a feud with his uncle Rodolfo, who managed the Italian side of the business. Paolo then decided to launch a brand under his full name, but the rest of the family stood in his way. To get revenge, Paolo exposed his father's personal tax evasion to the US authorities. Aldo, who had built the Gucci brand, was sent to jail. At his trial, a crestfallen Aldo tearfully forgave his son for his betrayal, but Paolo was exiled from the business and spent the rest of his life broke on a farm in England.
If that wasn’t enough drama, yet more scandal surrounded the Guccis in the mid-1990s. Apparently Maurizio, the only son of Rodolfo, inherited the largest stake in the firm and used this to edge his cousins out of the business. He joined forces with a London-based investment firm called Investcorp to buy the other family members out and share fifty-fifty control with the investment firm. However mirroring history, his cousins informed the Italian police that Maurizio had shady tax issues -- he forged his father's signature to avoid inheritance tax. Maurizio fled to Switzerland to avoid arrest. Maurizio returned to take control of the company after solving his legal problems, but eventually Investcorp decided to buy him out, and the Guccis lost complete control while Investcorp made billions.
While the internal melee was bad enough, equally damaging were careless decisions made about product distribution, which negatively reflected on the brand’s reputation. An ineffective distribution strategy expanded the reach to thousands of retailers, detracting from the brand’s essence of exclusivity. Eventually, retailers were selected more judiciously and the brand’s cachet returned. But all this back and forth took its toll; the brand went from headlines to sidelines, perceived as an old standard in the fashion world.
However, smart leadership in recent years has driven the Gucci brand to more visibility and success than ever before. The two men responsible for this resurrection are Creative Director Tom Ford and President/CEO Domenico De Sole.
Born in Austin, Texas, Tom Ford was educated at New York University and Parsons School of Design and began his professional design career in 1986 working for American designer Cathy Hardwick. Rapidly scaling the rungs of the fashion business, he became Design Director at Perry Ellis just two years later. In 1990, Ford joined Gucci as the company's Women’s Wear Designer, rising to Design Director in 1992. He gradually absorbed the position of Creative Director of Yves Saint Laurent Rive Gauche and YSL Beauté, before finally becoming Creative Director of the entire Gucci Group. Responsible for the design of all product lines from clothing to perfumes and for the group's corporate image, advertising campaigns and store design, it is Ford’s clean, elegant aesthetic that placed this once staid fashion brand back on the backs of the wealthy. Known today as one of the world’s leading visionaries in fashion, Ford has accumulated a great number of accolades on his rise to the top. He’s a three-time winner of the prestigious Council of Fashion Designers of America for International Designer of the Year and has won scores of other prestigious awards for his work with the Gucci brands.
Italian born attorney Domenico De Sole is the other half of this dynamic duo. As President and Chief Executive Officer of the Gucci Group and Chairman of the Group's Management Board, De Sole oversaw the acquisition process in forming the Gucci Group. He began his relationship with Gucci in 1984 as Chief Executive Officer of Gucci America, Inc. Ten years later, he moved to Italy as the Group's Chief Operating Officer and was appointed to his current position the following year. By integrating elaborate advertising and communication campaigns with a marketing strategy that placed the focus on Gucci's core leather products and ready-to-wear, De Sole brought much needed attention back to the quality of the brand while streamlining the back-end of the business and expanding the network of directly operated stores. He has gotten his own share of accolades for his efforts; The European Business Press Federation recognized Gucci's business achievements in 1998, selecting it as European Company of the Year from among 4,000 other companies.
Strong leadership and an image revamp literally breathed life back into the Gucci brand. Even so, the rocky economic climate of the past few years has made for a bumpy ride for the luxury goods market. The Gucci Group was among those who took a hit, reporting far fewer profits than in the past few years. Despite the numbers, analysts still cite Gucci as one of the stocks with greatest upside potential, giving it plenty of space on the runway.