Fashion's Old Fogies Create Succession Conundrum
At its core, the business of fashion is an endless quest for something new. Problem is, some of the biggest names are getting rather old.
Giorgio Armani and Chanel designer Karl Lagerfeld are in their 80s, Roberto Cavalli is 74, and Bernard Arnault, chairman of the company that owns Louis Vuitton, turns 66 in May. Of these, only Cavalli seems ready to swap his sketch book for slippers, as he's trying to sell his business. The rest present succession quandaries that could reverberate long after fashion's senior statesmen shuffle off the catwalk for good.
At stake are combined annual revenues of more than $40 billion and Europe's hold on the global market for designer handbags, shoes and other personal luxury goods.
“We're reaching the end of an era,” said Jane Kellock, founder of trend-consultant Unique Style Platform. “We may not see their like again.”
Replacing a superstar designer isn't easy, but it can be done. Twelve years after Coco Chanel died, Lagerfeld breathed new life into the Chanel brand by reinterpreting the founder's aesthetic -- think tweed skirt-suits and pearls for ladies who lunch.
More recently, Nicolas Ghesquiere has revived growth at Vuitton, the world's largest luxury brand, after Marc Jacobs left to focus on his own label. And Hedi Slimane has made Saint Laurent the hottest name in fashion with biker jackets, baby doll dresses and skinny jeans.
Get it wrong, though, and it can spell pain -- as Gucci's recent woes attest. After being promoted to creative director in 2006, Frida Giannini struggled to develop a distinctive identity for the Italian brand. That led to a slump in sales, and analysts at Raymond James expect it will take until 2017 to recover to high-single digit growth. Kering SA, which owns Gucci, dropped Giannini in January and replaced her with Alessandro Michele. Giannini couldn't be reached for comment.
Lagerfeld, 81, has been a fashion fixture since Dwight D. Eisenhower occupied the White House. The German designer, known for his prolific work ethic, black and white wardrobe, and ever-present sunglasses, has worked with Fendi for a half-century and -- simultaneously -- for Chanel since 1983. In his spare time he also designs for his own label.
Even if Lagerfeld's crocodile boots will be tough to fill (at Chanel, he designs eight collections annually) he's surrounded by strong teams. Fendi is co-designed by a member of the Italian founding family, and both companies employ scores of talented artisans.
While that provides some assurance of continuity, it also shows how the role of creative director is getting ever more demanding in a global, digital economy. Chief designers have to come up with head-to-toe collections in weeks rather than months. And they must travel more to promote them, all of which requires almost superhuman levels of energy, said Giovanna Brambilla, a partner at recruiter Value Search Srl.
“Geniuses always leave a hole,” said Brambilla. “But in some cases, the brand can actually benefit from new energy.”
Fendi declined to comment. Chanel didn't respond to a request for comment.
Kering and LVMH Moet Hennessy Louis Vuitton SE (which counts Fendi among its 70 brands) have been building stables of up-and-coming designers by taking stakes in their fledgling labels. LVMH invested in J.W. Anderson's business in 2013, and has since unleashed the Northern Irishman on bag maker Loewe.
Arnault, LVMH's chairman, has applied the roster approach to his succession. His two eldest children, Delphine and Antoine, already work at LVMH. And he has three other offspring, a nephew, and a niece, who could yet join them.
“The beauty of this kind of approach is that you leave quite a lot of time for the succession to gain traction,” said Luca Solca, an analyst at Exane BNP Paribas. “Delphine and Antoine have all the time in world to prove themselves and get stronger and more experienced and one day be the leaders.”
Cavalli doesn't have the same luxury, and his five children don't appear ready to replace him. Among them, his son Daniele has held the highest profile role -- a brief stint designing menswear -- but he quit last year. So the cigar-smoking Cavalli brought in a creative director in March and is holding talks to sell a majority stake to private equity firm Clessidra SGR. A spokeswoman for Cavalli declined to comment.
Armani, who rose to prominence dressing Richard Gere in the 1980 film American Gigolo, said last year he hasn’t made up his mind about what happens after him. The 80-year-old has no children, though his nephew and two nieces are on the board. Armani's spokeswoman says he isn’t in talks with any potential buyers.
For a designer who has previously explored deals with Hermes International SCA and LVMH, and who is so meticulous that he even decides how the light switches look in his hotels, it would be a surprise if he weren't making plans.
Yet uncertainty around his succession is itself a risk because Armani serves as owner, creative director and CEO of the company he founded in 1975, said Fabrizio Ferraro, professor of strategic management at IESE Business School in Barcelona.
If Armani were to allow others at his company to share some of the spotlight, he would assure the fashion community that the business can continue without him, whatever he decides, Ferraro said.
“Even if you're privately owned, more openness about the variety of management roles in a company would be positive,” Ferraro said. Armani's is a “sensitive and complex succession situation.”