Free Deluxe: How Luxury Lost Its Luster by Dana Thomas Page B

Gucci,” Ford told me. “The first day. ”
    Gucci had a new staff, a new look, and a new business plan. But it wasn’t enough. Maurizio’s astronomical spending combined with an economic downturn caused by a war in the Middle East and a recession in the United States—both big Gucci markets—nearly did the company in. Losses were reportedly $ 102 million between 1991 and 1993 , and the company was on the verge of bankruptcy. Investcorp, a Bahrain-based investment group that had bought out a number of family members in the late 1980 s, paid $ 170 million for Maurizio’s remaining 50 percent share in 1993 . A year and a half later Maurizio was shot dead in Milan by a hitman hired by his ex-wife. Mello left, Tom Ford became creative director, and De Sole was named chief operating officer of the company.
    One of De Sole’s first moves was to drop the price on all Gucci products by 30 percent, putting them lower than Chanel and Hermès and on par with Louis Vuitton and Prada. Then Ford worked his creative magic to draw the public to Gucci. When he presented the first Gucci collection under his complete control in March 1995 , he shattered Gucci’s staid aristocratic image and established a more modern and blatantly sexy voice. “Before I sent that first women’s show down the runway with the hip-hugger pants and the metallic shirt, I remember being so terrified because it was a dramatic change,” Ford told me in 1996 . “I really had to rethink Gucci, and what Gucci should be. And a lot of [editors and retailers] said, ‘Oh, it’s great, but it’s not Gucci.’” It didn’t matter. The public loved it. Gucci sales shot up from $ 264 million in 1994 to $ 880 million in 1996 . Smaller houses and mass-retail chains like Gap and Zara followed Ford’s design lead. Investcorp floated Gucci on the stock market, making it one of the most successful initial public offerings in fashion ever.
    Back in 1991 , Arnault had taken a good long look at Gucci with the idea of buying it. But after reportedly doing a great deal of due diligence, he backed off, telling associates that the brand wouldn’t go anywhere. Instead Arnault watched it blossom into a star brand, and now he wanted it, badly. In early 1999 , after quietly spending $ 1.4 billion to buy 34.4 percent of Gucci stock— 10 percent of which he purchased from Prada—Arnault launched a takeover bid. Tom & Dom, as Ford and De Sole were known in the fashion press, fought back. Arnault was called “the wolf in cashmere” and “a snake.” Women’s Wear Daily dubbed the confrontation “The War of the Handbags.” Ford threatened to quit if Arnault succeeded in his takeover; the clause in his contract that allowed this quick exit was called the Tom Bomb. De Sole declared, “Arnault is trying to steal this company.”
    On Friday, March 19, 1999 , it all came to a head. At 8:30 a.m., Arnault held a meeting of his top executives at the Disneyland outside of Paris. After that, he was to meet with De Sole again. But De Sole had other ideas. He and Ford called a press conference in Paris to announce the formation of Gucci Group with the help of their white knight—and Arnault rival—François Pinault, a French financier who controlled a group called Pinault-Printemps-Redoute (PPR), which included the auction house Christie’s, the Printemps department store chain, and La Redoute catalog. Pinault bought 40 percent of Gucci, for $ 2.9 billion—or $ 75 a share, $ 10 less than Arnault was willing to pay. Pinault also bought the Yves Saint Laurent Rive Gauche ready-to-wear and cosmetics companies for $ 1 billion. Arnault said he found the move “stupefying.” “[Pinault] came to my home with his wife, and my wife was seated next to him at the wedding of his son,” Arnault whined to Women’s Wear Daily . He was particularly bent out of shape that Pinault didn’t have the good grace to consult him first on the deal.
    Pinault laughed. “What, do you think I was going