Crisis at ARMANI?


Signore Giorgio Armani (photo Il Giornale)

The sudden resignation of John Hooks, Armani Group’s second highest ranking executive after the owner and founder himself, has left many industry analysis in an awe over the fate of the major corporate structure reorganization plans of the group. Hooks motivated his decision saying he would need a break after almost 11 years at Armani, however, indicating he has been evaluating several other projects. 

Hooks has been instrumental not only for the group’s expansion strategy worldwide but also for controlling all subsidiaries internationally. In the past years, he could often be seen not only at Armani stores inaugurations and major luxury events (latest one being in India), but also on Mr Armani’s side at all major press conferences and official events, from the inauguration of the Armani Hotel in Dubai to the launch of the Armani kitchen. 

Armani is no stranger to generating internal tensions and overnight departures of key executives, especially in its commercial and franchising divisions, the Emporio Armani line holding a record of Commercial Directors in the past decade. The first line, also called the black label or simply Giorgio Armani has been the only to maintain one top commercial executive in the past decade. 

John Hook’s appointment was sealed with a press release dated 30th September 2009, when he went from Deputy Director to Deputy Chairman and joining the Board of Directors with responsibility for global commercial strategy and markets as well as brands development.

Mr Armani who will turn 78 this July, is the only major Italian luxury industry player which has resisted both an IPO and a strategic alliance. Despite his lack of any direct heirs or family which could take over, Mr Armani has also denied the persistent rumours of his intention to sell a stake to any of the other major players, the most rumoured potential bidder being French beauty giant L’Oreal which holds the Armani licenses for fragrances and cosmetics, Armani being one of its most profitable brands in its luxury portfolio.

Many would also question Mr Armani’s excessive diversification strategy, which made sense at the time of the economic boom, when he released the first Samsung Armani mobile phone. He then went on to kitchens, chocolate, flowers, sports gear etc. His latest major venture was the much anticipated Armani Hotel in Dubai, which, despite its cutting edge decor and hospitality innovations could not have opened at a worse time, at the peak of the Dubai crisis, when its ruler had to acquiesce to renaming the tallest building in the world which houses the Armani Hotel, after his counterpart, the ruler of the oil rich Abu Dhabi.

But probably the biggest challenge facing Mr Armani is not his succession or whether he would accept to partner with a major investor or industry group but mostly the identity and positioning crisis his brand has been facing in the past decade, when the split between his lines has become more steep. The climax was when he took back control of his Armani Exchange line two years ago, followed by the development of the Armani Jeans line stand alone store concept, the first of which opened last year in Milan’s Central Railway station. Instead of banking on the notoriety of his lines to share brand values, much like in the case of BURBERRY which strategically placed all of its different lines under the same store concept, Mr Armani opted for further splitting the retail concepts of its different lines.

Oliver Petcu