Armani After All

One morning in June Giorgio Armani woke to smoke pouring from the ground floor of his palazzo in Milan. Trapped in his living quarters on the top floor, the 67-year-old dean of Italian designers waited while the firemen did their jobs. "I stayed very cold, very philosophical," he said hours later, sitting at his desk in an immaculate white T shirt and blue jeans. "This happened. It's over. That's life."

Armani told NEWSWEEK that story in one of several interviews about the latest chapter in his remarkable career: a bold global expansion into a variety of new cities, stores and merchandise. Though famously reticent, Armani also spoke openly about a personal tragedy that shaped his determination to retain control of the House of Armani--a move that could prove to be his smartest yet. Shunning pressure to sell out to larger suitors in this age of megamergers, Armani has retained complete control of his empire and, more important, of the cool, minimalist design sensibility that helped put Italian fashion on the map and that he is now extending to cosmetics, shoes, jewelry--even furnishings.

It's an unusual strategy these days, but Armani's timing may be perfect. The slovenly arrogance of the late millennium--that you could be a slob because you were going to be a billionaire--has passed. Dot-comers have been reliably sighted wearing coats and ties. And in times of economic uncertainty, there's always a tendency to look to eternal verities for grace under pressure. During the Great Depression people fell for the impeccable calm of Fred Astaire. Now Armani's elegantly relaxed style may offer similar allure to a world fretting about the risks of global recession.

If Armani manages to seize a unique moment, it won't be the first time. In the 1970s he revolutionized the way men and women dressed, in part by dressing them like each other. In the 1980s he redefined the look of Hollywood by making glamour subtle, and in the 1990s he built an empire selling blue jeans as well as business suits. Now, despite the edgy economy and his age, he's gambling hundreds of millions of dollars on expansion. There are plans for Armani florists and Armani cafes in select locations. Adding to a retail empire that already spans more than 200 outlets in 33 countries, he will open new Casa Armani home-design stores this fall in Los Angeles and New York, and megastores next year in Hong Kong and London.

In retrospect, Armani can be seen as the Anti-Bubble. At the height of the soaring stock market, he could have sold his company for enough to move him way up on lists of the world's richest humans. (He's currently number 292 on the Forbes roster.) "We're talking billions of dollars," he says. "Of course I was tempted." Other fashion houses were tempted, too, and they rang up debt to bet on the market. Privately held Prada bought Jil Sander, Helmut Lang and Church's Shoes. It figured these names would dazzle the street in anticipation of a lucrative IPO, which Prada had to put off as the market fell this summer. Armani's most powerful corporate suitors, luxury conglomerates Gucci and LVMH, have seen their shares plunge since January 2000 highs.

Now Armani's solo strategy is looking pretty smart. While rivals must answer to an embittered and cautious market, Armani answers only to himself. During the bubble years he accumulated $800 million in cash that allowed him to underwrite his current expansion. "I can judge my work better than anyone else," he says. He admits he wasn't always so confident. "Years ago I was scared of the world," he says.