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A new day for Gucci
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June 4, 1999: 1:10 a.m. ET
Successful defense of takeover attempt changed company, chief says
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NEW YORK (CNNfn) - Gucci faces a new future as an acquirer of other high-end brands, the company's chief said Thursday.
Domenico De Sole, chief executive of the Italian fashion house, said on "The Moneyline News Hour with Lou Dobbs" that the successful defense from a heated takeover attempt by French luxury goods giant LVMH has transformed his company, yet also strengthened it.
Here are highlights of that interview:
LOU DOBBS, ANCHOR: Domenico, first of all, the takeover battle -- it's over?
DOMENICO DE SOLE, CHAIRMAN & CEO, GUCCI: I think so. It seems to be over, and we won.
DOBBS: You won and you won big, but also, you had to give up a sizable share of ownership.
DE SOLE: The company has changed. The situation has changed. We were a model brand company for a long time. We built our success in being a model brand company, and now obviously, with the influx of capital from PPR, the future Gucci will have to become a strong, complete, very successful multi-brand company. So a big change for the company.
DOBBS: A big change, and a taxing battle. I know both your energies and the resources and focus of your management team, yet the performance speaks for itself. It's been a remarkable period.
DE SOLE: Yes, it's been very exciting. When Tom Ford, our creative director, and I took the company in our hands back in 1994, our total sales were a little bit more than $200 million. Last year, our net profits after tax were $200 million. So it has been a great success. Again, it's a modern brand. And then, the first few months of this year, we had some totally unexpected excitement.
DOBBS: Unexpected excitement -- LVMH. Have they indicated to you that they are at peace now?
DE SOLE: No, they didn't say anything, but I think the judge took care of them.
DOBBS: They took care of them. The Dutch decision, setting aside all of the issues and giving you the court victory. What do you do now? You have done a remarkable job turning Gucci around, you have re-established, if you will, the brands in the upper stratum of luxury goods. What do you do now?
DE SOLE: I think next is going to be a new life as a multi-brand company. In fact, starting over the next few days, we'll start the due diligence of ... Yves St. Laurent, which also is a very, very exciting time; it's one of the real great brands that was synonymous with elegance, and ready-to-wear since the '60s and '70s. So it's going to be a new challenge for the company.
And then obviously now that we have a tremendous amount of cash -- in fact we have more than $3 billion in cash to build this multi- brand company -- obviously it's going to be a new life looking for acquisition, and hopefully have the same success with other companies that we had with Gucci.
DOBBS: Let me ask you: The EU is meeting in Cologne -- the issue of the euro -- is it important to you, as one of Europe's leading businessmen, where the euro is really in terms of relationship to the dollar?
DE SOLE: Not really. In fact I think that, you know, if you look at -- considering our production is all in Italy, I think somewhat a weak euro somewhat helps us to selling our product to, you know, Americans, and Asians and Japanese.
I really think that the issue of the euro -- I thought, was a lot of hoopla throughout Europe when the euro was launched. It think it's a great moment for Europe. As a kid, before going to United States, I remember the vision of the united Europe, so the launch of the euro was a tremendous accomplishment for the Europeans, and I think that it was a great hope, and to see the euro going down I think is emotionally very difficult for a lot of people.
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