Aug 1, 2016
Armani creates foundation as succession issue looms
Aug 1, 2016
Italian fashion designer Giorgio Armani said on Friday he would create a foundation in his name, for the first time shedding some light on succession plans for his fashion business.
Armani, who recently turned 82, founded the eponymous group in 1975 and is the sole shareholder.
Still very actively involved in the business, he has never clearly indicated a designated heir or outlined future plans for his empire, which extends from fashion and cosmetics to interior design and hotels.
Armani said in a statement the foundation would "safeguard the governance of assets of the Armani Group and ensure that these are kept stable over time in respect of and consistent with some principles that are particularly important to me."
According to Exane BNP Paribas analyst Luca Solca, "a likely future scenario is for the Armani business to be enshrined in (the) foundation, in an arrangement similar to luxury watchmaker Rolex."
Rolex is controlled by a foundation named after its founder Hans Wilsdorf.
Armani, known for its clean-cut designs, is also seen as a potential candidate for a stock market listing.
Giorgio Armani said future management of the company would have to be committed to "innovation and excellence", and be supported by "appropriate investments, prudent and balanced financial management, limited recourse to debt and a careful approach to acquisitions."
The statement gave no further details.
"This structure will certainly make it harder, if not impossible for Giorgio Armani to be bought by another group. Armani has always said he wanted to maintain his group independent," said Bernstein analyst Mario Ortelli.
Ortelli added that it will be "interesting to see the governance of the foundation in order to understand the implications on a management, operational and fiscal level."
Armani, whose fortune is estimated by Forbes at $5.9 billion, said in 2014 he was studying the possibility of creating a foundation to protect the future of his fashion empire, saying: "I don't want to leave problems for the people who come after me."
Armani has also hinted over the years that he could list or sell the group.
Revenues at the Milan-based group were up 4.5 percent last year, to 2.65 billion euros ($3 billion), placing Armani just behind Italy's biggest fashion group Prada (1913.HK) which had sales of 3.55 billion euros last year.
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