The answer may come by the end of the month. Gucci Group president and chief executive Domenico De Sole said Wednesday that a decision about the renewal of his and creative director Tom Ford’s contracts could come in a matter of weeks. That statement came as Gucci posted a 47 percent plunge in second-quarter profits, along with a 1.1 percent uptick in sales.
“For the sake of our employees and our colleagues, we should try to make an announcement as soon as possible, hopefully by the end of the month,” De Sole told WWD in a phone interview, denying a spate of recent press reports that Gucci and principal owner Pinault-Printemps-Redoute had established a deadline for a decision. Both contracts expire next year.
Later in the day, De Sole appeared to strengthen his stance on the matter. Speaking on a conference call, he told analysts that an announcement would “probably” come by the end of the month.
Reiterating previous comments, a PPR spokesman said in response, “As soon as there is something to announce, we’ll announce it. We haven’t set any precise timetable. We don’t feel it is appropriate to negotiate through the press.”
Speculation over whether Ford and De Sole will stay or go amid reported tensions with PPR has grown particularly intense in recent weeks. One recent theory, considered far-fetched by many in the industry, had the pair heading to Versace. De Sole said he did not want to comment on rumors while a Versace spokesman reiterated that “there are no plans for Mr. De Sole or Mr. Ford to join Versace.”
As expected, Gucci’s numbers highlighted the challenges of doing business in an environment characterized by SARS and the aftermath of the Iraq war. At the same time, De Sole expressed optimism that trading conditions are improving and Gucci should post a strong comeback in the third and fourth quarters of the year.
Gucci’s net profit for the quarter ended July 31 plunged 47 percent to $26.6 million from $50.2 million in the year-ago period, as both costs and markdown expenses increased. De Sole said it was necessary to slash prices to move old goods out of the stores and make way for the fall collection.