Lady of the House

By Kristina Zimbalist

Regime changes in fashion have a few things in common with presidential campaigns: both feature bitter rivalries, professional jealousy and personal attacks, and both involve a lot of money. That's why it's been particularly hard for designer Frida Giannini, 35, to win the vote of her fashion constituents for the three years that she has been overseeing the creative direction of Gucci, the $3.1 billion (2.1 billion euro) apparel, fragrance and accessories juggernaut. Compared with her predecessor, the fashion rock star Tom Ford, Giannini cuts a low profile, and critics have called her runway shows everything from "hard to warm to" to "pedestrian." What most infuriates the front-row naysayers, of course, is that Giannini's style is working: in 2005 and 2006, Gucci reported 18.4% and 16.8% growth, respectively. In 2007, it reported an 11% increase.

More success for the Gucci brand had seemed unimaginable when Ford stepped down as creative director four years ago. Ford transformed the posh but petrified label into a global megabrand, resurrecting the company to the tune of $1.8 billion (from $500 million) and ushering in an era of stone-cold sexiness. Gucci's image, not to mention its stock price, soared. But in late 2004, Ford left the company abruptly after clashing with management. The Gucci Group hired three designers to replace him; two seasons later, the then 33-year-old Giannini--who had been plucked from Fendi by Ford in 2002--was the only one left standing.

The waiflike Giannini has a deep voice and feline self-assurance. Her appointment to the top spot in 2005 came with an announcement of extreme corporate confidence that belied her scant experience: the brand aimed to double revenues through 2011. True, she was young, female and European and therefore uniquely in touch with her target customer. But Gucci's execs also knew that Giannini was a genius with handbags--fashion's red-hot commodity. She was, after all, one of the designers who helped create Fendi's blockbuster baguette, the tiny bag that ignited the accessories frenzy that continues to drive luxury's bottom line.

At Gucci, Giannini worked her magic with the Flora print, an iconic design created as a scarf for Grace Kelly in 1966. As Ford was churning out the label's black-on-black nightclub vibe, Giannini splashed the happy flowers onto Gucci's bags. "There were so many people who said, 'Maybe it's too pretty for Gucci.' But to me, it was such an important design. So light in a way, but with a good energy," Giannini says. The Flora became one of the most successful products in Gucci history, a fact not lost on Gucci management or industry analysts.

Handbags have a 30% to 40% margin, while apparel has only 15% to 20%, which is why luxury brands use the runway to leverage their image and then optimize profitability with leather goods. In Gucci's case, leather goods make up more than 50% of profits, the majority of those from handbags. Financially, the strategy is working. "They are performing extremely well, despite the slowdown of the general consumer market," says luxury analyst Yasuhiro Yamaguchi of UBS in London. "Coach, Tiffany and Burberry are all saying they've started to see slowdown, but Gucci is resisting the cyclical downturn and delivering double-digit growth."

Giannini's bigger challenge has been to try to reposition Gucci's clothing lines. With her first collection, she followed her devil-may-care instincts and showed sophisticated and feminine 1940s-inspired tea dresses, an abrupt move away from Ford's overt sexuality. Since then, some retailers felt the clothing lacked luster. "It's never an easy thing, following a strong designer at a brand that has a strong identity," says Ann Stordahl, executive vice president of women's apparel at Neiman Marcus. "But I think Frida has worked to add a feminine aspect to the Gucci brand. She's had a lot of emphasis on color and print. We've actually been a little surprised that the customer has responded."

For Giannini, emphasizing wearable over sexual was part of the plan. "Women of my generation have a real life," she says. "They need to work. They have personal lives. I want to design something for them, something personal, something that comes from the brain."

Giannini, who graduated from Rome's Fashion Academy, is often described by co-workers as a controlling, somewhat fiery workaholic, although to the outside world she maintains a guarded fac,ade. Glimpses into her design rooms are forbidden, as are previews of upcoming collections. And a few subjects do ignite her rumored tartness. One obvious nerve is the idea that her clothes lack a strong fashion message. "It's a very stupid comment," she retorts. "I never approach a collection thinking it needs to be commercial. But if my ideas are so desirable that people want to buy them, to me, the collection is a success."

Her affinity for strong women shows up in her office (the walls are lined with photographs of '60s icons like Sofia Loren dressed in Gucci) and in her choice of collaborators. She asked Madonna to co-host Gucci's Feb. 6 celebration of its new Fifth Avenue flagship, the biggest in the world. The event will unveil a new design for the label's stores, which feature giant windows to let the sun in. Giannini is working to make sure it keeps shining on Gucci too.