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Gucci, Take Two: New CEO Knows Food -- But Fashion?
By TERI AGINS and ALESSANDRA GALLONI
Staff Reporters of THE WALL STREET JOURNAL
September 29, 2004

Tomorrow, Gucci will unveil its spring 2005 collection during the Milan fashion shows, its first big runway splash since the departure of superstar designer Tom Ford.

But many eyes will be on another, less camera-ready executive: Robert Polet, the former head of Unilever's frozen foods division, who was named the new CEO of Gucci Group on July 1.

A decidedly nontraditional choice for the luxury-goods maker, Mr. Polet is commanding the spotlight at a time when a wave of consumer-products executives is stepping up to reshape the business of high fashion.

Just a few years ago, Hal Reiter, CEO of fashion executive recruiters Herbert Mines & Associates, would never have proposed an industry outsider -- even one of Mr. Polet's caliber -- for a top fashion job. "This industry has traditionally been provincial," says Mr. Reiter.

Today it's anything but. Since fashion ballooned into a global, multibillion dollar industry over the past decade, recruiters are increasingly looking for investor-friendly executives with disciplined leadership skills, strong financial backgrounds and brand-building experience. The best source for talent: consumer-products giants. "You should find someone who understands the same customer, only you're going to be selling him a product that is different," Mr. Reiter says.

Following in the footsteps of Gucci's former dynamic duo -- CEO Domenico De Sole and Mr. Ford, the designer -- Mr. Polet has faced skepticism in fashion circles for his lack of a luxury pedigree. Just last week, Gucci arch-nemesis Bernard Arnault -- whose LVMH Moet Hennessey Louis Vuitton lost out in a bitter takeover battle to buy Gucci three years ago -- fanned the flames of the rivalry before a group of financial analysts: "They have inexperienced management," he said of his main competitor. "We'll have to see. It'll be interesting to watch."

The new CEO's tenure ramps up at a time when the luxury-goods maker is at a crossroads with several of its brands. Gucci said yesterday that operating profit for the group more than doubled in the fiscal second quarter ending July 31 to $80 million from $33 million a year earlier. The company said it pared losses at all its unprofitable divisions, including Yves Saint Laurent. But except for Gucci, the core brand whose profits rose 18% in the period, and Bottega Veneta, which broke even at the operating level for the first time, all of the company's other brands are losing money.

Mr. Polet's biggest test is likely to come at the end of the year, when he unveils a three-year plan for Gucci's many brands, including Yves Saint Laurent, Bottega Veneta, Sergio Rossi, Alexander McQueen and Stella McCartney. Giacomo Santucci, who heads the Gucci division, says he projects double-digit growth of all Gucci brand products for the spring/summer 2005 collections. But some analysts are already speculating that Mr. Polet may announce heavy cost-cuts and possibly the sale of one or two of the company's other lesser-performing labels.

Retail executives and Gucci employees who've met Mr. Polet (pronounced Po-lay) say he is impressive and approachable. The charming 49-year-old Dutchman, they say, has been traveling the world visiting Gucci boutiques and factories where he has been asking employees lots of questions and showing respect for their craftsmanship and accomplishments. Mr. Polet declined to be interviewed for this article.

The notion of an ice cream executive running a fashion business is still hard for many industry insiders to fathom. Most European fashion companies such as Gucci, Gianni Versace SpA, Salvatore Ferragamo SpA and Fendi began as small-town, family businesses, relying on funding from family members and local banks for growth. As a result, most of these companies relied on brothers, spouses and other relatives to be the bosses. Likewise, most American fashion CEOs came from inside the insular fashion world, working their way up from sales jobs at small design firms or training programs at department stores such as Federated Department Stores Inc.'s Bloomingdale's chain, where Gap Inc.'s former chief executive Millard "Mickey" Drexler began in the late 1960s.

But today, veterans of big consumer products companies tend to be better equipped to build global brands and run businesses in an era of heightened competition, recruiters say. Success in a modern fashion house demands more than just creativity. Increasingly, it also requires more mundane skills such as inventory management and marketing know-how, says Mr. Reiter. Former investment bankers, such as Jones Apparel Group CEO Peter Boneparth are among the new breed of fashion executives, overseeing frenzied merger activity, managing debt and spearheading initial public offerings.

Mr. Arnault himself recruited LVMH's number two, Antonio Belloni, from Procter & Gamble Co. The Cincinnati, Ohio-based consumer products giant has bred a number of fashion honchos, including Gianluca Brozzetti, CEO of British luxury house Asprey & Garrard and Paul Charron, CEO of Liz Claiborne Inc. Milan fashion house Versace SpA hired Fabio Massimo Cacciatori, a management consultant, as interim CEO last year. Eyewear giant Luxottica SpA, which markets designer eyeglass frames and operates the Lenscrafters chain, hired Andrea Guerra, an Italian refrigerator executive as its new CEO earlier this year.

Mr. Belloni, who joined LVMH in September 2001, says his experience in managing P&G's portfolio of brands has served him well at LVMH. In response to a steep downturn in luxury goods over the past several years, Mr. Belloni was one of the architects of a major cost-cutting and brand refocusing drive at the company.

"At P&G, there were 300 brands to manage. At LVMH there are 50. But in both cases, I've been forced to make choices," says Mr. Belloni, who also came to Milan this week for the shows. "Creativity in consumer goods is very channeled, while in the fashion world it often breaks the rules. But the concept of brand-building is the same."

One of the main differences for executives from the consumer goods industry who enter the fashion world is gauging a very subjective reaction to products. "If a detergent makes clothes whiter, the consumer sees that, and it's measurable and objective," says Mr. Brozzetti, who was among the first non-home-grown fashion executives when he first joined Gucci in 1986. "When it comes to jewels, the consumer's response is subjective."

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