Luxury Market Forces Line Up Against Giorgio Armani Group’s Independence

Since its founding in 1975, Giorgio Armani fiercely guarded the independence of his company. Even as his fashion empire grew and acquisitive luxury conglomerates came knocking, he remained resolute to maintain full control of his company, refusing to compromise his entrepreneurial spirit and artistic vision.

So determined that his company’s independence be maintained, he established the Giorgio Armani Foundation to carry on company operations as an independent entity after his passing. Now that he’s crossed over at the ripe old age 91, will the safeguards he established be strong enough to preserve his legacy? Can his heirs and those controlling the interests of the foundation resist the inevitable temptations that will be put before them?

“Brands like these rarely come to market, I expect significant industry interest,” shared Bernstein analyst Luca Solca. At the same time, he noted the brand has lost some of its cachet, which includes the core Giorgio Armani brand, Emporio Armani and A|X Armani Exchange, plus beauty, furniture and home decor, restaurant and hotel businesses.

Solca also observed that the company would benefit from “revitalization and fresh perspective,” making new ownership, with its promise of scale and maximized shareholder value that much more appealing.

Armani Group revenues reached $2.7 billion (€2.3 billion) in 2024, down 5% from previous year at constant exchange rates. On the profitability side, EBITDA declined 24% to $466 million (€398 million) after a record level of $389 million (€332 million) was invested back into the company.

“I am convinced that pursuing consistency and continuity and avoiding the pursuit of immediate gains is the best strategy to ensure long-term success,” Armani said in a statement. “Thanks to this approach, in an increasingly complex and competitive global environment, I am proud to say that we have maintained the Group’s independence and stability.”

Passing The Torch

In 2016, Armani outlined his succession plans through the Giorgio Armani Foundation, though specific details won’t be revealed until the reading of his will.

At the time, he established bylaws for the foundation’s operation and specified how voting shares will be distributed. He also selected three individuals to oversee the foundation, all of which remain confidential.

Among his close circle and presumed heirs are 72-year-old Pantaleo Dell’Orca, who joined the company in 1977 and oversees the company’s menswear lines. His nieces, daughters of older brother Sergio, work for the company. Silvana Armani manages the women’s lines and Roberta Armani handles celebrity and entertainment relations. His sister Rosanna Armani sits on the company board, and her son Andrea Camerana is the sustainability managing director.

As of early this year, longtime lieutenants Guiseppe Marsocci and Daniele Ballestrazzi were promoted to deputy general managers, with Marsocci overseeing sales and marketing and Ballestrazzi responsible for finance and operations. These executives will have prominent roles as the new organization takes shape.

It is unclear how the creative function of the Armani Group will be managed, whether under a single creative director or divided across the different product lines.

Maintaining Tight Control

Those closest to Il Signor Armani – his sobriquet among employees and collaborators – have been groomed to follow his lead. Yet the shoes he leaves behind will be hard to fill. He was both the company’s right-brain creative force and the left-brain executive manager, a rare combination that testifies to the man’s extraordinary talent.

He didn’t always wear both hats. In the early days, his cofounder and life partner Sergio Galeotti handled the financial and administrative side of the business. Upon Galeotti’s passing in 1985, Il Signor Armani stepped into that role as well, becoming the company’s sole owner and visionary leader.

While delegation may be the superpower of some business leaders, Il Signor Armani was famous for exerting control over every detail large and small in the business.

“Everything you see has been done under my direction and carries my approval. My greatest weakness is that I am in control of everything,” he said in his last interview with the Financial Times just days before his death.

Milan-based marketing professor Alessandro Balossini Volpe questions how quickly the leadership team will be able to adapt and make decisions on their own without having Il Signor Armani to turn to.

“That transition won’t be easy,” he said, adding, “Signor Armani carefully designed a succession plan, with the goal of preserving the longevity, integrity and consistency of his own brand after him. Only time will tell whether this plan will be successful.”

More Guard Rails

In establishing the foundation, the intent was to “safeguard the governance assets of the Armani Group and ensure that these assets are kept stable over time.”

Guided by principles to maintain autonomy and independence of the company and an ethical approach to management that supports “continuous development” of the Armani brand, the foundation bylaws specify “prudent and balanced” financial management with controls on debt. It also establishes a “careful” structure for potential acquisitions.

The bylaws further outline an approach to a potential stock market listing. However, the foundation is required to wait five years after his passing before going public, according to Reuters.

The Giorgio Armani Foundation structure is not without precedent. Rolex founder Hans Wilsdorf established the Hans Wilsdorf Foundation, a non-profit organization, which took full ownership of the for-profit Rolex corporation upon his death in 1960.

The company has operated quite successfully since that time, free from the pressures of outside investors and public markets. One could argue that because of that structure, Rolex has been able to prosper through the ups and downs in the luxury market since that time.

Innovation Or Extinction?

It’s been said that Giorgio Armani changed the shape of fashion after his designs starred alongside Richard Gere in American Gigolo. Yet since that time, the luxury fashion industry has undergone a shape shift of its own, as conglomerates now dominate the future of the luxury industry.

In Darwinian terms, private ownership of a luxury fashion label, the norm when Armani started, has been naturally selected for extinction. Today only a handful of luxury brands remain privately held and family controlled, including Chanel, Dolce & Gabbana, Prada, Max Mara and Missoni. Conglomerate ownership has replaced the old model, with its promise of scale, synergy and potential to maximize shareholder value.

However, luxury industry insider and founder of the SUN Deluxe newsletter on Substack, Susanna Nicoletti believes that the structure Il Signor Armani established under the foundation could pave the way for a new independent luxury business model that founders of next-generation luxury brands can follow, since it is already too late for so many that came before them.

“Giorgio Armani went his own way and never followed the trends nor fell into the finance world’s temptations,” she shared. “He’s always been a real entrepreneur, always reinvesting in his own business and spending all his energies to develop brand equity in a natural way. Fashion was a passion for him, not a tool for short term gain.”

Nicoletti believes that by following a pragmatic approach to limited, carefully managed growth – what she holds should be the norm for brands in the luxury fashion industry – the future of the Giorgio Armani brand is assured under the foundation structure he established.

“He will have found solutions to governance that will surprise the industry and hopefully open the way to a more organic and pragmatic business model. King Giorgio could truly be, once again, the protagonist of innovation in the fashion business management. We all hope so,” she concluded.