Sunday 3 December 2023

It has not always been eclectic elegance for Gucci

By Radithebe Rammutle 

On March 27, 1995, Maurizio Gucci, a former businessman and head of the Gucci fashion house was gunned down, mafia-style, while taking his morning stroll to his office. He had just been ousted as the chairman of the famous brand Gucci. Today, the memory of this traumatic event in the history of Gucci is almost non-existent. The high-end luxury fashion house based in Florence, Italy, is known for its Haute couture, not its dark tale. Handbags, ready-to-wear, footwear, accessories, and now recently home decoration adorning the red, green, and gold Gucci logo have become a symbol of status. 

Maurizio Gucci was the last of the Gucci’s to exit the family business. The Gucci family was at the helm of the business for just over seven decades and it has changed hands several times. Today owned by Kering, a French-based multinational corporation specialising in Luxury goods. Kering also owns Yves Saint Laurent, Bottega Veneta, and other brands. Gucci is the star performer in Kering, contributing 57% of the group’s revenue. In the financial year 2020/2021, all the brands achieved a sale rebound from a sluggish performance in the 2019/2020 financial year. 
Guccio Gucci founded the family business in 1921. He opened a store and workshops in Florence and sold imported leather luggage. Along the way, due to political changes, he had to diversify his business away from leather to other materials. And the rest is history. Guccio had six children and only three of them inherited the business. Aldo Gucci, the eldest son of Guccio, build the brand to become the international icon we know today. With the help of his brothers, Vasco and Rodolfo, Aldo took the business international opening its first American store in the Savoy Plaza Hotel on East 58th Str., New York. This move gave the bussing business greater access to the world market. To date, Gucci has 519 stores mainly located in Asia Pacific (182), Western Europe (103), North America (100), and Japan (72).

The perks that came with controlling a growing empire eventually energized feuds amongst the family members in the early days of expansion. Amongst the three brothers that inherited the business only Rodolfo and Aldo had children who eventually became part owners of the business. When Vasco died in 1974 and having no children of his own, the  two other brothers divided the business equally between themselves. 

Paolo Gucci, Aldo’s second son was an inquisitive character that stirred controversy within the business. In one of the controversies, he found out that his father and uncle, Rodolfo, were evading tax in the United States (US). In 1978 the business in the US made $48 million in sales but much of the profit went to offshore accounts his father and uncle set up. He alerted the US authorities resulting in the arrest of his father for a year. Paolo’s animosity to his family later became an asset that his cousin Maurizio used in his power grab for the company.

Maurizio, the only child of Rodolfo, inherited 50% of his father’s stake in the business after his death in 1983. The ambitious scion had a different vision for the company which was no longer an exclusive high-end brand. He wanted to break from the trademark licensing business model which generated significant income but also tainted its reputation because inferior products could easily be adorned with the Gucci trademark. His cousins and uncle did not share his vision to break with the licensing business model. He thus hatched a successful plan to oust them from the business. 

To get rid of the other Guccis, Maurizio managed to get Arab Banking Corp, a Bahrain investment bank, also known as Investcorp, to buy 50% of Gucci. It is alleged that his cousin Paolo, was the first one to agree to sell in a series of transactions facilitated by Morgan Stanley between 1988 and 1989. As the only remaining Gucci in the family business, he set out to redefine it. He did away with the licensing business model, which was keeping the business afloat despite its negative effect on its brand. Talents such as Dawn Mello, Richard Lambertson, and Tom Ford were recruited to revitalize the business. But all these efforts did not lead to major success and Maurizio eventually sold his shares to Investcorp, ending the family’s involvement in 1993. He obtained $120 million for his shares.

All along this journey Maurizio’s relationship with his extravagant wife Patrizia Reggiani was estranged. He lived in Italy while his wife and daughters lived in the US. Maurizio’s decision to sell his family business was his death knell because it meant that Patrizia was no longer Gucci’s first lady as she was popularly known back then. It also meant slashing her income which made her resentful of her husband. For these transgressions, she hired a hitman to kill him.   


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