The new bylaws under the banner of stability, which provide for eight categories of shares, two of which are non-voting, will go into effect immediately after passing to heirs
By Sergio Governale
The Giorgio Armani spa group, which is 99.9 percent owned by the eponymous designer from Piacenza, plans to list the company’s shares on a regulated market after the fifth year following the entry into force of its deferred-effect bylaws, which were approved at the 2016 extraordinary shareholders’ meeting and supplemented last Sept. 26 with the introduction of non-voting shares. Those Bylaws will come into effect when the succession of the “king” of Italian fashion, born in 1934, opens. This was reported by Il Corriere della Sera, pointing out that the information comes from a confidential document, according to which the future structure of the group will be under the banner of stability and will give priority to the continuous global development of the name ‘Armani, in the search for an essential, modern, elegant and unostentatious style.
Recall that two and a half years ago Armani was rumored to be looking for a partner (see here a previous article by BeBeez). Among those potentially interested in the brand were the names of Remo Ruffini, owner of Moncler, which in December 2020 bought the men’s casual wear brand Stone Island (see here a previous article by BeBeez), and Exor, which took over 24 percent of the shoe brand Christian Laboutin (see here a previous article by BeBeez) and invested in late 2020 along with Hermès 80 million euros in Shang Xia, a Chinese luxury brand.Finally, recall that his nephew Andrea Camerana, who is married to dance singer Alessia Aquilani, known by her stage name Alexia, shares great-great-grandfather Giovanni Agnelli, among the founders of Fiat, with Exor ceo and Stellantis chairman John Elkann.
The partner search project, however, has evidently receded, and Mr. Giorgio Armani, who has no direct heirs, will remain at the head of his empire until the end and will subsequently hand over the baton to his nieces Silvana and Roberta, daughters of his brother Sergio who passed away years ago, and his sister Rosanna‘s son, Andrea Camerana, according to the holding company’s governance rules and very specific “founding principles.” Which are the following, as revealed in the document shared by the Corriere della Sera: “Adequate level of investment for brand development,” “balanced financial management,” “moderate recourse to debt,” “reinvestment of profits in the Giorgio Armani company,” “diversification and segmentation of the different corporate brands, maintaining consistency in the stylistic, image, product and communication activities,” “attention to innovation, excellence, quality and refinement of the product,” “cautious approach to acquisitions,” and only to “develop skills that do not exist internally.”The founding principles are the same as those of the Giorgio Armani Foundation, which holds 0.1 percent of the share capital of the holding company, founded seven years ago by the fashion designer with a nominal value of 10 million euros and also paying 200k euros at the same time. In addition to Giorgio Armani, the board of the moral entity includes Pantaleo Dell’Orco, a manager who has always been close to the fashion designer, and Rothschild banker Irving Bellotti.
At the time of the establishment of the Foundation, which aims to “carry out projects of public and social benefit,” it was Armani himself who explained his choice in a note, reported by Pambianco: “The Foundation will ensure over time that Armani’s governance arrangements remain stable, respectful and consistent with certain principles that are particularly close to my heart and that have always inspired my activity as a designer and entrepreneur. These founding principles are based on: autonomy and independence, an ethical approach to management with integrity and fairness, a focus on innovation and excellence, absolute priority to the continued development of the Armani brand supported by adequate investment, prudent and balanced financial management, limited recourse to debt, and a cautious approach to acquisitions.
The heirs all sit on the board of the holding company, along with Dell’Orco and entrepreneur Federico Marchetti, founder of Yoox. “My successors will continue to be on the board of directors and will own shares in the company that I have earmarked for them through a will.
A part of Giorgio Armani will pass directly to the foundation. Mechanisms are then foreseen whereby my heirs will eventually be able to liquidate their share by transferring it to the Foundation itself,” explained the designer again at the time of the Foundation’s establishment, which will therefore be “the needle in the balance” of the group to come.
The bylaws for the “after Giorgio” provide for six categories of shares, from A to F, all equal in terms of dividend distribution, keeping in mind that only “50 percent of net profits will be distributed,” in addition to the two non-voting ones introduced in September, which will allow the capital to be opened for pure investment, thus without any decision-making power, the value of which cannot be more than half of the share capital. A-shareholders will have 30 percent of the capital, F-shareholders 10 percent, all others 15 percent each. But each A share will entitle to 1.33 votes and each F share to 3 votes. So A and F with 40 percent of the capital will have over 53 percent of the votes at the meetings. In addition, A shareholders are entitled to appoint three directors, from whom the chairman will be chosen, and F shareholders two directors, from whom the CEO will be drawn, out of a board set at eight members. It is likely that these two share classes will include the Giorgio Armani Foundation. Especially since directors A and F have decisive powers on the board in strategic decisions. In fact, mergers, demergers, amendments to the bylaws, and capital increases require 75 percent of the votes at the extraordinary meeting. In contrast, an absolute majority of those present on the board is sufficient for approval of the budget and “at least 51 percent” for compensation, otherwise “directors are not given any compensation,” although they may be paid “in the form of profit sharing” or stock options. For the choices of Men’s Style and Women’s Style directors, the procedure involves all categories, but A and F shareholders have veto power.
Year 2022 ended with 2.35 billion euros in sales and 162 million in net income for the group, which employs 8,700 people, up 16.5 percent from 2021. Operating income last year was 202.5 million, up 30 percent from 2021; net income before tax was 218 million, up 16.4 percent from 2021. The group posted revenues of just over 2 billion euros in 2021, up 26.3 percent from 2020, ebitda of nearly 439 million, up 21.7 percent from the previous year, and net cash of over 1.12 billion (see Leanus report here, after registering for free).
The first quarter of this year saw net revenues up 18 percent, “broadly confirming the balanced growth across channels and the increase in operating profitability,” albeit with some variation in terms of geography with Europe holding up and the United States where a slowdown” in sales is “expected. The company simplified its brands in 2017, focusing on Giorgio Armani, Emporio Armani, and A|X Armani Exchange. The latter two absorbed the Armani Collezioni and Armani Jeans lines, respectively
