Giorgio Armani’s Will Triggers Competition for Fashion Empire

The fashion world is poised for a significant shift following the passing of renowned designer Giorgio Armani at the age of 91. In a surprising turn of events, Armani’s will, published on September 12, 2023, reveals his intention for the Giorgio Armani Foundation to sell a stake in the luxury fashion empire he built in Milan over the last 50 years. This decision marks a notable departure from his long-standing resistance to selling the company to a French conglomerate.

Armani had established the foundation in 2016, intending to protect his brand from potential breakups or takeovers. Despite this, his will outlines a plan to sell an initial 15 percent stake within 18 months of his death, with a further 30-54.9 percent to follow within three to five years. Analysts estimate that the entire company could be valued at a staggering €7 billion (approximately US$8.3 billion; S$10.6 billion), making it one of the most sought-after assets in the fashion industry.

The announcement has sparked interest among major players in the luxury market. Among the potential buyers mentioned in the will are two French companies: LVMH, controlled by billionaire Bernard Arnault, and L’Oreal, which has collaborated with Armani on beauty products for nearly 40 years. EssilorLuxottica, the eyewear group, is also a contender. Both L’Oreal and EssilorLuxottica expressed their appreciation for being considered while suggesting that an outright purchase might not be forthcoming.

In contrast, LVMH is viewed as a serious candidate for acquiring a portion of Armani’s brand. Reports indicate that Arnault has had a longstanding interest in the fashion house, considering it a valuable addition to his extensive portfolio. He remarked that he was “honoured” to be named in Armani’s will and emphasized LVMH’s commitment to enhancing Armani’s global presence.

The reactions from industry insiders highlight the unexpected nature of this development. Many were taken aback, especially given Armani’s previous statements dismissing any sale to French firms. The 2023 documentary Milano: The Inside Story of Italian Fashion notably featured Armani rejecting such a notion, making the mention of LVMH in his will particularly surprising.

Armani’s will also instructs his heirs, including his close associate Leo Dell’Orco and family members, to consider other companies of similar caliber that already have partnerships with the fashion house. The foundation is mandated to retain at least 30 percent ownership of the group, ensuring some degree of continuity and control over the brand’s legacy.

The allure of owning a piece of Armani extends beyond its status as a luxury label. The brand’s diverse product range includes not only high-end fashion but also restaurants, hotels, and a successful home design line. Additionally, its beauty products, particularly the Armani Prive fragrance line, have proven to be lucrative, with prices around €300 per bottle. However, potential buyers may face challenges due to the existing beauty licensing agreement with L’Oreal, which runs until 2050.

Some industry executives speculate that the breadth of Armani’s offerings could complicate a sale. Concerns about brand dilution and consumer confusion due to the variety of products under the Armani name have been raised. The potential for a public listing of the business has also emerged as an option should selling a stake prove unfeasible. This would align Armani with other Italian fashion brands such as Prada and Moncler, which have successfully transitioned to public markets while maintaining controlling stakes.

Armani’s focus on preserving his legacy is evident in the provisions laid out in his will. The executive committee of his brand stated that the foundation would act as a “permanent guarantor” of the founding principles that guided Armani throughout his career. Analysts suggest that the decision to seek a larger partner reflects a pragmatic approach to ensuring the future of the brand, as challenges in the luxury market continue to evolve.

As the fashion industry prepares for what could be a transformative period, the implications of Armani’s will are profound. The competition to secure a stake in one of the world’s largest privately owned luxury groups promises to unfold in the coming months, with significant repercussions for the future of the Armani brand and the broader luxury market.