Giorgio Armani SpA is working with Boston Consulting Group on ways to grow in a few key luxury segments before a stake-sale process is set to kick off later this year, according to people familiar with the matter.
The Italian fashion group is evaluating expanding in hospitality and handbags – a crucial part of luxury that represents only a small part of Armani’s business, the people said, asking not to be named because the plan is confidential.
Armani has been working with a number of consultants on a business plan since the death of founder Giorgio Armani in September, the people said.
A representative for Armani confirmed that the company is working on a business plan, while declining to comment on the role of Boston Consulting. Boston Consulting declined to comment.
Work on the plan includes an assessment of Armani’s price positioning and distribution model, the people said.
It comes as closely held Armani evaluates a potential 15% stake sale in a process set to start in September, following guidance laid out in the late founder’s will.
Read more: What shape does Armani fashion take now without Giorgio Armani?
Armani’s death occurred during a period of downturn for personal luxury goods, with Armani posting organic sales that fell 2.8% last year at constant exchange rates.
To date, his heirs have added industry veterans to the board and elevated Giuseppe Marsocci to chief executive officer, while refraining from making sweeping changes to the business.
Now the company is considering a senior creative appointment at Emporio Armani, the people added.
The line offers black dresses for €840 (approximately RM3,915) and formal men’s suits for €1,250 (RM5,825), putting it among the more affordable brands in luxury fashion.
The company representative declined to comment on Emporio Armani.
Armani offers fashion lines ranging from the more mass-market Armani Exchange to exclusive and red-carpet gowns from Giorgio Armani Prive.
Handbags haven’t traditionally been a significant revenue generator for the brand. They are a key part of the luxury industry since these products tend to carry high profit margins.
The company also sees its hospitality offering, from minimalist furniture pieces to hotel stays, as more important to its image as luxury becomes more experiential.
In January, the company formed a joint venture with Symphony Global, the private investment company of Mohamed Alabbar, to develop future Armani hotels and resorts.
Alabbar is the founder of Dubai’s Emaar Properties PJSC, which built the world’s tallest tower, the Burj Khalifa. The partners already have hotels in Dubai and Milan.
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In his will, Giorgio Armani directed his heirs to find a strategic partner 12 to 18 months after his death.
He named eyewear firm EssilorLuxottica SpA, beauty conglomerate L’Oreal SA and leather goods giant LVMH Moet Hennessy Louis Vuitton SE – or a company of similar standing – as preferred bidders for the initial 15% stake, which could rise to nearly 70% within five years.
As an alternative, the company could also be listed on a public stock market.
L’Oreal has a long-term license with Armani to sell its fragrances and cosmetics, while EssilorLuxottica covers eyewear.
The preferred companies have stayed mostly tight-lipped about their plans, with some reports that Armani may seek multiple investors for the 15%.
Armani kept a tight rein over his fashion empire until just before is death at age 91. Since then, the creative reins of the fashion group have been overseen by chairman Leo Dell’Orco and the founder’s niece, Silvana Armani.
"We cannot fail to recognise the need to adapt to a changing context,” CEO Marsocci said in April. – Bloomberg
