After Years of Inter-Familial Squabbling, the Guccis Finally Leave Gucci

Aldo went to jail. Maurizio became a fugitive. Paolo claimed that his relatives beat him.

The Guccis, creators of some of fashion’s best-known status symbols, have known constant trouble as a result of family feuds.

Now there are signs that peace is returning to the luxury goods company. But as a result of the turmoil, the company held tightly by generations of male Guccis now is half-owned by Arabs, run by a team of MBAs and headed by a woman.

The woman is Maria Martellini, a 48-year-old former professor of economics at Milan’s Bocconi school, one of Italy’s leading business institutions.

“Of the Guccis, only ashes remain,” laments Giorgio Gucci, the firm’s honorary president.

Gucci was one of the pioneers of the international Italian fashion boom, combining centuries-old Florentine artisanship with modern snob appeal.

That recipe won it a following among such style-setters as actress Audrey Hepburn, Princess Grace of Monaco and Jacqueline Onassis.

Image Suffered

Money has been no object to customers who have snapped up everything from a $11 bar of soap to a $50,000 hand-sewn alligator trunk.

“The people in the market want Gucci,” notes Enrico Cucchiani, the company’s managing director. “Unfortunately, there’s this Gucci ‘Dynasty’ side to the story.”

The company was founded in 1922 by Guccio Gucci, a leather goods salesman who emphasized Florentine quality and tight family control of the business.

It was with some reluctance that he watched his son Aldo expand overseas--a drive that has resulted in 180 stores and about 82% of the parent company’s sales today.

Aldo nonetheless maintained many of his father’s principles, bringing his sons Giorgio, Paolo and Roberto and his nephew Maurizio into the executive ranks.

The well-heeled Gucci image suffered its first jolt when Paolo proposed more inexpensive products and licensing, and his relatives opposed the plans.

The disagreement exploded into an argument at a 1982 board meeting, and, according to a suit filed by Paolo, his relatives smashed a tape recorder over his head.

They denied the charge and the case was eventually dismissed.

In a subsequent lawsuit by Paolo, charging that his family had blocked his efforts to trade under his own name, produced documents alleging that his father, 81-year-old Aldo, evaded taxes in the United States. The suit was dismissed, but the Internal Revenue Service picked up on the documents, and in January, 1986, Aldo pleaded guilty to tax-evasion charges in a federal court in New York. He was sentenced to a year in prison but was allowed to serve part of his sentence at a halfway house in West Palm Beach, Fla.

Gucci relatives were aghast at the war threatening to tear apart the family and the firm it had built.

“The company was a part of my life,” says Giorgio, Paolo’s older brother. “I had always smelled the perfume of leather, had always watched my grandfather in the shop in Florence, working with so much energy.”

In 1984, Maurizio used his 50% of the company to seize control and oust Aldo. The young, bespectacled Maurizio brought in a new team of managers.

Overcome ‘Family Firm’

“The board decided the company had to be professionally managed,” explains Cucchiani, one of the young, American-educated executives.

But older family members saw it differently.

“Maurizio wanted to overcome the idea of a family firm,” says his cousin Giorgio.

Peace did not reign for long. Maurizio’s relatives alleged that the papers giving him half the company on his father’s death in 1983 had forged signatures. Maurizio’s shares were frozen.

Based on his relatives charges, courts in Florence and Milan charged Maurizio with exporting capital and evading taxes. An arrest warrant was issued and Maurizio took refuge in Switzerland.

To replace him, state-appointed custodians of his shares appointed Maria Martellini.

“A new era has begun,” Martellini says. “The company has a place in the market that is more important than the specific problems of the Gucci family.”

Under its new management, the company has launched a program to expand production, standardize the quality of its stores and trim its product line, which had expanded beyond leather goods to 100,000 items.

Sales increased over 1986 by nearly 4% to 238 billion lire in 1987--about $170 million at current exchange rates.

Guccio Gucci’s linked initials still adorn the firm’s handbags, luggage and scarfs. And in workshops in Florence, apron-clad artisans cut black and cobalt-blue alligator skins and guide handbags through sewing machines.

But the Guccis are nearly gone from Gucci.

Last spring, Giorgio and his brothers Roberto and Paolo decided to sell most of their shares in the company. The purchaser was Investcorp, an Arab investment bank.

While a judge ruled in July that 40-year-old Maurizio could return to Italy, his shares are frozen. If he loses his court cases, he may have to sell some.

Giorgio says he parted with his shares because the new management was not interested in his ideas and the traditional standards.

The new managers, however, insist the company will continue to reflect the vision of Guccio Gucci.

“There is a tremendous strength that goes beyond the fights and feuds,” says Cucchiani. “The strength is the consumer who wants this brand. The strength is also with the people who work with the company that want the Gucci splendor, and the artisans that want that splendor.

“The name has got a magic connotation.”