BUSINESSWEEK ONLINE : OCTOBER 23, 2000 ISSUE
BOOKS A Grand Opera Starring the Guccis THE HOUSE OF GUCCI A Sensational Story of Murder, Madness, Glamour, and Greed By Sara Gay Forden Morrow -- 351pp --$26 For a moment, it seemed the curse of the warring Guccis still haunted the famed Italian fashion and leather-goods company. Shortly after Domenico De Sole was appointed chief executive in July, 1995, he dropped in on a design meeting where creative director Tom Ford and his assistants were developing a new line of handbags. Fretting that the boss was undermining his authority, Ford announced he couldn't concentrate and asked De Sole to leave. De Sole later exploded. ''How dare you throw me out of a meeting,'' he shouted at the young Texan. ''I am the CEO of this company.'' The hostility escalated, climaxing with the duo hurling obscenities at each other. That heated altercation--which the two men now laugh about--was nothing new at Gucci. Over its 79-year history, feuding family members pitched vases across the boardroom, sued and denounced each other to the tax authorities, and ultimately contracted for murder. Sara Gay Forden's The House of Gucci describes it all: It's a riveting account of the talent and creative chaos that built one of the world's great luxury-goods empires--and the egotism, bitter family conflict, and incompetence that nearly destroyed it. While she details the corporate history meticulously, Forden, former Milan bureau chief for Women's Wear Daily, structures the story around forceful personalities and the mystery behind Maurizio Gucci's 1995 murder. It's a business tale that has the holding power and pace of an engaging novel. Starting with founding patriarch Guccio Gucci, who struggled and innovated to keep his family business afloat through depression and war, Forden carefully sketches the huge cast of characters that starred in a century of corporate drama. Guccio's son Aldo looms large as the business brains behind Gucci's rapid global expansion in the 1950s and 1960s, leveraging the patronage of aristocrats and movie stars from Queen Elizabeth II to Grace Kelly into one of the hottest global brands of the 20th century. Grandson Maurizio battles uncle Aldo and cousin Paolo for control of Gucci in the 1980s and wins, but his spectacular overspending and mismanagement nearly destroys the company. And of course, there's the murder tale: As its tragic climax, investigators close in on Maurizio's ex-wife Patrizia Reggiani, who was bitter about her divorce and loss of the glamorous Gucci association. She was convicted in 1998 of arranging the contract killing and handed a 29-year prison sentence. While such doings are dramatic enough, Forden goes far beyond the last book on the subject, Gerald McKnight's 1987 Gucci: A House Divided, to reveal what makes Gucci (GUC) tick today. At its Florence headquarters, the corporate culture now bears little resemblance to the Gucci of 10 years ago. The emphasis today is on professional management, transparent accounting, and commitment to shareholder value. The creative vision is one of trendsetting fashion that is glamorous, fun, and irreverent--and above all quick to reinvent itself. The protagonists of Gucci's hugely successful makeover in the 1990s are De Sole and Ford. Paving the way for their turnaround were the investment bankers and managers of Investcorp and Morgan Stanley, who wrested control of the bankrupt company from Maurizio. When Investcorp stepped in as the first nonfamily shareholder in 1988, acquiring 50% of the company from bickering family members, Gucci was in desperate need of an overhaul, its image having been cheapened via a proliferation of licensing contracts with makers of low-quality goods. Maurizio was keen to refocus the company, and he enticed Investcorp to let him keep full control--setting the stage for wild spending and abysmal management. By 1992, Gucci had a negative net worth of $17 million and sales were plummeting. At secret meetings, Investcorp managers who sat on Gucci's board persuaded Gucci America CEO De Sole to join their war team in a fierce battle to rescue Gucci from Maurizio. A flurry of lawsuits and countersuits ensued. Investcorp board members left Gucci's accounts unapproved and creditors unpaid--bringing it to the brink of liquidation by the courts. Finally, Maurizio capitulated and sold his 50% ownership to Investcorp, for $120 million. With resources drained and morale desperately low, De Sole and Ford dug in. ''The company was paralyzed,'' said De Sole, who was sent to Italy in 1994 as COO. Fast-forward two years to Gucci's initial public offering in September, 1995, when Investcorp sold out, netting $1.7 billion on its initial $290 million investment. The market was responding to the lightning bolt Tom Ford's first fashion show had sent through the industry. '''It was hot! It was sex!' said Joan Kaner, senior vice-president and fashion director for Neiman Marcus.... 'You just knew that wearing those clothes would make you look like you were living on the edge--doing and having it all.''' Gucci's turnaround brought a whole new set of problems. As the Asian financial crisis in 1997 hit luxury-goods stocks, the company was increasingly attractive to potential bidders. Stalked by Prada Chairman Patrizio Bertelli in 1998 and later LVMH's Bernard Arnault, De Sole and Ford struggled to keep their independence. Forden's account ends with Gucci's white-knight rescue by French investor Franois Pinault and his purchase of Yves Saint Laurent for Gucci. Another dramatic episode in the saga is due this month, with De Sole launching the remake of YSL and weaving Gucci into a global luxury group with several labels. Forden's book is a richly detailed read for anyone fascinated by the legends of Gucci past and the new Gucci-in-the-making. By GAIL EDMONDSON Edmondson is BUSINESS WEEK's Rome bureau chief. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					RELATED ITEMS A Grand Opera Starring the Guccis PHOTO: Cover, ``The House of Gucci'' INTERACT E-Mail to Business Week Online

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