The House of Gucci

by Sara G Forden

  Morante reassured Aldo that he was working for an international investment institution and dangled a proposal to keep Aldo involved in the business for several years under a glorified consulting contract.

  “He knew he had lost the match and had little to negotiate, but the sense that he could maintain his honor and in some way a role in the business was a matter of life or death,” Morante said later. “I had the overwhelming feeling that if he sold out entirely, he would die. It was as though he were tearing out a piece of himself. And in that moment, he hated his children for what they had done to him. After all he had given to them, he was left with nothing.”

  In April 1989, Investcorp sent Rick Swanson to Geneva to close the deal with Aldo. That transaction ended a process that had lasted more than eighteen months, one of the longest, most complicated, and most secretive series of acquisitions in investment banking history.

  “Miraculously, nobody found us out until the very end,” recalled Swanson. “For more than a year and a half, we had lawyers, bankers, trademark experts—everybody you could think of working for us. Normally, in Italy if you sneeze the whole world knows!” At one point, Investcorp was close to closing on another block of shares with one of the cousins while in the next room a crew from 60 Minutes interviewed Maurizio and speculated on who could be buying Gucci—all to the tune of the theme song from Dynasty.

  Investcorp’s acquisition of 50 percent of Gucci marked another turning point in the history of the family-owned company. It was the first time since Guccio Gucci started his small business that an outsider owned such a significant block of shares in the family firm. Most important of all, Investcorp was not an individual but a sophisticated, unsentimental financial institution intent on realizing successful returns for its investors—although it would prove far more patient and understanding than many other institutions might have been.

  The final meeting with Aldo took place at lawyers’ offices in Geneva. The men at Investcorp couldn’t believe they had finally come to the end of their long journey. They nervously envisioned a worst-case scenario—what if they wired the money to Aldo’s accounts but then Aldo and his lawyers grabbed the share certificates and ran, leaving the bankers empty-handed?

  Investcorp’s team lined up on one side of the conference table, Aldo and his lawyers on the other. The share certificates lay in front of Aldo. The entire group waited for the bank to call saying the funds had gone through.

  “It was so strange, everything had been negotiated and everything had been signed and there was really nothing more to say and we were all just sitting there in silence waiting for the phone to ring,” recalled Swanson.

  When the phone finally rang, everybody jumped. Swanson picked up the receiver. “When I got off the phone to say OK, the money had gone through, Aldo moved forward in his seat to stand up and our lawyers lunged across the table for the shares. We were so nervous!”

  Aldo blinked, startled, with the shares in his hands. Then he got up, walked over to Paul Dimitruk, and gallantly handed him the shares.

  “These Guccis, they really were all actors, they never showed their sweat,” recalled Swanson. The tension was broken by the pop of a champagne cork and a short speech by Dimitruk about Aldo’s heritage and what he had built. Then Aldo made his own speech, faltering as he failed to contain his tears. “It was all very sad,” said Swanson.

  Everything Aldo had worked for had ended. At age eighty-four, he had followed his sons out of Gucci’s door, selling his last remaining piece of the empire he had built to a financial institution.

  “When we finished, we just stood there and nobody knew what to say, and there was an awkward silence,” Swanson said. Then Aldo put on his cashmere coat and fedora hat and his advisors put their coats on and everybody shook hands and then they went out the door into the cold Geneva night. About thirty seconds later, Aldo came back through the door—the ultimate humiliation—his taxi hadn’t shown up.

  Two days later Aldo sent Swanson his travel and hotel bills for attending the closing. “That was so Gucci.” Swanson laughed.

  10

  AMERICANS

  One warm morning in June 1989, Maurizio welcomed Dawn Mello, the president of Bergdorf Goodman, into a suite that he had reserved expressly for their appointment at New York’s Hotel Pierre.

  “Miss Mello! I am so glad to see you!” said Maurizio emphatically, as he invited her into the room and gestured for her to sit on the overstuffed couch while he settled into a wing chair to her left. Light from the window streamed in behind him. He had been calling her for weeks, but she hadn’t returned his phone calls until just more than a week earlier. Maurizio wanted Mello to help him make his dream for Gucci come true, and said, “My relatives have destroyed this brand and I am going to bring it back.” Mello listened carefully, impressed with his fluent, only slightly accented English.

  Dawn Mello had become a star on the U.S. retail scene for her revival of the venerable—yet sleepy—Bergdorf Goodman. Maurizio knew it would be difficult to woo her away, but he was determined.

  LOCATED ON THE WEST SIDE OF FIFTH AVENUE between Fifty-seventh and Fifty-eighth Streets, Bergdorf Goodman was founded in 1901 by two merchants, Edwin Goodman and Herman Bergdorf. Over the years, the store earned a reputation as one of the most elegant and expensive women’s stores in the world, but by the mid-seventies that reputation had started to slip. Goodman’s son Andrew had sold the store in 1972 to a three-way partnership, Carter-Hawley-Hale. In an effort to reverse the slide, in 1975 the new owners hired Ira Niemark, a tall, soft-spoken, seasoned retail executive from B. Altman who had started his career at the age of seventeen as a doorman at Bonwit Teller. Niemark brought Dawn Mello with him.

  “Bergdorf Goodman was a store that had aged along with its owners,” Mello recalled. “The average customer was about sixty years old and very conservative. The image of the store was so dusty that neither the French nor the American designers would sell to us!”

  Mello knew from her experience as fashion director at B. Altman that such designer names as Fendi, Missoni, Krizia, and Basile from Italy were starting to gain a following. A young Gianni Versace was turning heads with his designs for Callaghan, the brand name created by an apparel manufacturer named Zamasport in northern Italy.

  “We began to buy the Italian collections,” Mello recalled, and they also redid Bergdorf Goodman’s decor, creating a luxurious yet homey feeling. An antique crystal chandelier from the former Sherry Netherland Hotel now hung in the entrance hall over a new Italian intarsia marble floor and fresh flowers were placed daily in crystal vases throughout the store. By 1981, Bergdorf’s carried all the top designer names from Italy and France, including Yves Saint Laurent and Chanel. Even Bergdorf Goodman’s pale purple shopping bags became status symbols and were carried by society matrons, rock stars, and princesses alike. When in the early nineties the Yves Saint Laurent name began to lose its shine, Bergdorf’s boldly dropped the designer, a move symbolic of how far the store had come. “There is only one New York City Ballet, one Metropolitan Opera, one New York Stock Exchange, one Madison Square Garden, one Museum of Modern Art, and one Bergdorf Goodman,” wrote Town & Country in 1985.

  Maurizio wanted Mello to do for Gucci what she had done for Bergdorf’s. Years earlier, Aldo had identified her as a woman with the right balance of smarts and style for the Gucci business and had tried to hire her several times, but she had always turned him down.

  Maurizio had first started calling Mello at the end of May 1989. He had just recovered full control of his Gucci stake and thanks to his new alliance with Investcorp, he had been unanimously reelected chairman of Gucci on May 27, 1989. When Mello didn’t return his phone calls, he got a mutual acquaintance, Walter Loeb, the Wall Street retail analyst, to call her.

  “Maurizio Gucci is anxious to talk to you,” Loeb said, “why aren’t you responding to him?”

  “I’m really not interested,” Mello replied. “I love my store. I don’t want to leave
. What can I possibly do for him?” She had been promoted to president in November 1983, with all the benefits of the position, including the perfect office complete with a picture window looking up Fifth Avenue toward Central Park. Mello had reached the pinnacle of the American luxury retail world, and after thirty-four years in the business, she wasn’t about to give it all up for an Italian businessman—even if his name was Gucci.

  “Do it as a favor for me, go speak to him for me,” Loeb had implored her. Mello agreed.

  Mello could see the Hotel Pierre from her office above Bergdorf’s. Before going to her appointment with Maurizio that morning she lingered at the window for a few minutes, looking down at the domed canopy over the Pierre’s front door. Then she turned briskly, went downstairs, and emerged from Bergdorf’s revolving doors into a blast of unseasonable heat. The sun beat down as she paused impatiently on the corner of Fifty-eighth Street and Fifth, waiting for the light to change. She flicked some imaginary flecks of lint from her suit and looked irritably at her watch. “This is a waste of my time,” she thought crossly. She had so much to do back at the office and had hoped to get some correspondence done before her afternoon product meeting. She wished she hadn’t agreed to the appointment with Gucci. The light changed and she started across the street, her mouth set firmly.

  Mello came from Lynn, Massachusets, a small industrial town north of Boston. She had been crazy about clothes from early childhood, cutting out new clothes for her paper dolls and playing dress-up in her mother’s outfits. She studied illustration at the Modern School of Fashion and Design in Boston, which no longer exists, and at night took drawing and painting courses at the Boston Museum of Fine Arts. But after hurting her hand in a car accident, she realized she couldn’t maintain the skill she had worked so hard to develop. Before she turned twenty, she set out for New York City where she started modeling. But despite the success her attractive face and willowy, nearly six-foot-tall figure brought her, she found the work tiresome. She wanted more. She lied about her age and landed a job with a division of Lane Bryant to open a chain of their Over 5'7" Shops, to retail clothing for tall women around the country. After completing a training program in Boston, she started out.

  “It was a big adventure,” Mello said. “I had never been outside of Boston except for that brief experience in New York. I had a small salary and a very small expense account, but I knew I was on the right track.”

  Mello next moved into the training department at B. Altman, where she waited for a job to open up. In those years, B. Altman was a grand old store that took up an entire block at Thirty-fourth Street and Fifth Avenue. A carriage trade store then considered the Harrods of Manhattan, B. Altman had fine products and a loyal following. Mello’s moment came in 1955 when Betty Dorso, the glamorous and talented former editor of Glamour magazine, came on as fashion director. A former cover girl, Dorso hired Mello as her assistant.

  “I learned about style from her,” Mello said. “She was into Chanel and wore cardigans and silk shirts and pleated skirts—very modern for her time. I would walk behind her, dressed in the cheaper version of what she had on, affecting the same pelvic tilt.”

  Mello first saw European fashion when Dorso brought back dresses from the couture shows in Paris that the store then had copied by manufacturers on Seventh Avenue. In those days, couturiers such as Balenciaga, Yves Saint Laurent, Balmain, and Nina Ricci showed custom designs during the Paris couture shows, but the ready-to-wear designer hadn’t yet emerged. “There was a huge gap between the couturier and the apparel manufacturer,” Mello recalled.

  At this time, a few designers had started working in New York. Claire McCardell, Pauline Trigère, Ceil Chapman, and others had staked out new territory. A very young Geoffrey Beene designed for Traina-Norell, while Bill Blass worked for Maurice Rentner, but in those days the manufacturer was still more important than the designer.

  In 1960, the May Department Stores Company recruited Mello as fashion director. During the next eleven years, she worked her way up to become general merchandise manager and vice president.

  “That’s where I learned the basics, that you have to put your pants on one leg at a time,” Mello said. Then she fell in love with the president of the company, a man named Lee Abraham, and married him.

  “I had to leave, or go to work for my husband,” she recalled ruefully. She went back to B. Altman in 1971 when Ira Neimark hired her as fashion director. Neimark had also worked for the May Company and was familiar with her work. They were a close and successful team; he was a talented merchant, and she had a sense of creativity and style, which he encouraged. “They were an unbeatable pair,” recalled Joan Kaner, senior vice president and fashion director of Neiman Marcus.

  As a woman in a man’s world, she had learned to be tough without sacrificing style or manners. Shy yet determined, Mello often struck people as elegant but aloof. Those who managed to delve beneath the surface, however—especially the talented young people she encouraged and promoted—found in her a warm and supportive friend.

  Mello stood out in the retail world not only because she was a woman in a high-level position, but because of her creative, fashion-oriented approach to the business. “I was lucky to have worked with people who encouraged me to develop my fashion sense,” Mello said. “While the average buyer was worrying how to get which products to her stores at what price, I was able to work on a more creative level.”

  She developed an eye for quality and stylish products and a nose for coming fashion trends. A whiz at spotting budding new businesses and design talent, she brought many new names into the stores where she worked. In order to keep pace with the razor-sharp competition among New York’s top retailers, she drove hard bargains and sought exclusive contracts wherever possible. By the time Mello reached Bergdorf’s, she had become a commanding presence in the international fashion world, not just with designers and fellow retailers, but also with writers and editors at the top fashion magazines.

  “GUCCI HAS TO RECONQUER the image it had in its youth,” Maurizio was saying to Mello as she sat on the couch, listening. “Over the last few years, Gucci has lost its prestige. I want to bring back the glamour it had in the sixties and seventies; I want to regain the confidence of the consumer; I want to re-create the excitement.”

  Mello remembered well what Gucci had been in its glory days. As a young woman working for Lane Bryant, she had saved up an entire week’s salary to buy her first Gucci bag: a brown pig suede hobo bag that at the time cost sixty dollars.

  She also remembered the period when people lined up outside the store on Fifth Avenue waiting for it to reopen after lunch. In Maurizio’s warm, enthusiastic, and inspired company, her reservations began to melt away. As he spoke, she forgot about her phone calls, the memos waiting to be written, the afternoon meeting, her corner office overlooking Central Park. First entranced, then excited about what Maurizio was saying, she understood in a flash what he wanted to do. The Gucci name had been cheapened. The canvas handbags with their interlocking Gs were everywhere. By the late 1980s, Gucci sneakers had even become status symbols for drug dealers; rappers sang about Gucci in a popular rap tune. Maurizio wanted to wipe the slate clean and bring back Gucci’s glory days, when it was the symbol of luxury, quality, and style.

  “I need someone who knows what Gucci was like at its peak, I need someone who can believe it can be that again, someone who understands what the business is about. I need you!” Maurizio said, looking Mello earnestly in the eyes.

  When Mello finally walked out of the Pierre back into the early June heat two and a half hours later, her head was spinning. She had missed her meeting and, remarkably, didn’t care!

  “I had the feeling my life had been changed,” she said. Maurizio had asked her to help create the new Gucci.

  It didn’t take long for Maurizio’s courtship of Mello to hit the New York City rumor mill and Domenico De Sole started receiving questions from his staff and phone calls from the New York ret
ail fashion community asking him if the stories were true. Not only had Maurizio not told De Sole about Mello, he denied the rumors when De Sole called to ask him. De Sole dutifully reported back to his callers that the rumors were false—only to discover shortly thereafter that the rumors were true and Maurizio had kept him in the dark.

  De Sole, upset at how Maurizio had treated him, offered to leave—he could always go back to his law practice in Washington, D.C. Maurizio refused to accept De Sole’s resignation and asked him to continue his work at Gucci America.

  “The important thing in understanding my relationship with Maurizio is that Maurizio was beginning to enjoy his power,” De Sole recalled. “He had been pushed around all his life—first by his father, then by his wife and then by his relatives who had forced him into exile. Suddenly he was back, he was the CEO of Gucci. Investcorp and Dawn Mello and others were showering him with respect—he thought he was invincible. I made him uncomfortable. I had been the hero of the war [with Aldo]. I was a lawyer. I treated him with respect, but I wasn’t in awe of him or intimidated by him. I was the only one who wasn’t bowing down to him. When he said, ‘Let’s cut wholesale,’ I said, ‘Are you sure you want to do this? It represents a lot of business. Do we have the money to do it?’ He never understood the concept of money.”

  De Sole kept his post at Gucci America and Dawn Mello moved to Italy in October 1989 as the new creative director of Gucci with a salary that was double what she was making at the time and a benefits package that included luxury apartments in New York and Milan, Concorde flights back and forth, and a personal car and driver for a total cost of more than $1 million. Mello’s news made a splash on the New York fashion scene.