Before Tom Ford arrived, Gucci was a house of fashion that interested only aging socialites and Japanese tourists. Then, Ford gave it a radical facelift -- the newly glamorous Gucci attracted the bold and beautiful (and rich), metamorphosing "from a $200 million purveyor of leather goods to a $3 billion luxury conglomerate" (Unmesh Kehr, "A Bid for Star Power," Time,<http://www.time.com/time/insidebiz/article/0,9171,1056300,00.html>, June 2005). Now, an M&A party time! Pinault Printemps Redoute -- a French conglomerate best known for its "timber trading, cheap furniture, bookselling, consumer credit and African car dealerships" -- acquired it for "Euros 7.2 billion" (Jo Johnson, "Another Renaissance in Florence?" Financial Times, 8 Jun. 2004, p. 12). PPR lost Tom Ford (as well as chief executive Domenico De Sole and ten other top directors) last spring, which "sapped investor confidence and wiped nearly Euros 800m off PPR's market value" (Johnson, p. 12). Gucci's new CEO is Robert Polet, "the head of Unilever's ice cream and frozen food division" (Johnson, p. 12). What's PPR's fashion philosophy? "The Wall Street Journal quoted Serge Weinberg, the chief executive of Pinault-Printemps-Redoute, which owns Gucci, saying that 'the debate about whether it's the designer or the brand that is more important is open,' and citing the example of Prada as a luxury house with a team approach. 'No one talks about Miuccia Prada,' Mr. Weinberg said. 'No one knows it's she who designs the Prada brand'" (Cathy Horyn, "As Tom Ford Bows Out, a Tiff Over Star Power," New York Times, p. B8). But the loss of talent shows in the new Gucci catalog. Is it any wonder that Goldman Sachs estimated that "PPR will not beat its cost of capital on the investment in Gucci until 2008" (Johnson, p. 12)? -- Yoshie
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