MILAN (Reuters) -Italian designer Giorgio Armani established one of the world's most famous fashion businesses over the past five decades, and his death announced on Thursday inevitably raises questions about the future of a company whose independence he cherished.

Giorgio Armani was the sole major shareholder of the company he set up with his late partner Sergio Galeotti in the 1970s and he has no children to inherit a business which generated revenue of 2.3 billion euros ($2.7 billion) in 2024.

However, the meticulous Armani put in place measures to try to ensure continuity in a business that he ran with trusted family members and a network of long-time colleagues. 

He had a younger sister, Rosanna, two nieces, Silvana and Roberta, as well as a nephew, Andrea Camerana. The nieces and nephew have senior positions in the group. His right-hand man Pantaleo Dell'Orco is also regarded as a member of the family, and all five of them are likely heirs.

More clarity on his plans is likely to emerge in the coming days, when Armani's will is opened.

However, some of the outlines for the future of the company without its founder have already been made public.

SECURING HIS LEGACY BY SETTING UP A FOUNDATION

Giorgio Armani started to think of a plan to guarantee a smooth succession and to retain the company's independence more than a decade ago, which led him to set up a foundation in 2016.

His aim was to "safeguard the governance (of) assets of the Armani Group and ensure that these assets are kept stable over time in respect of and consistent with some principles that are particularly important to me."

The designer told Italian newspaper Corriere della Sera in 2017 that such a mechanism was needed to help his heirs to get along and to avoid the group being bought by others or broken up.

The foundation currently holds a symbolic 0.1% stake in the Milan-based group but after his death it was expected to get a bigger share, alongside the other heirs, Giorgio Armani said in the same interview. 

He also said that three nominees he had designated would run the foundation following his death.

NEW BYLAWS CREATE BLUEPRINT FOR FUTURE

After creating the foundation, Armani also drafted new company bylaws due to take effect upon his death. The document sets out the future governing principles for those who inherit the group.

The bylaws divide the company's share capital into several categories with different voting rights and powers. It is not clear from the document how the different blocs of shares will be distributed. 

The bylaws call for a "cautious approach to acquisitions".

They also give some indication about a potential stock market listing, which would require the favourable vote of the majority of directors "after the fifth year following the entry into force of this statute".

Over the years, the group has received several approaches from potential investors, including private equity firms, but Armani always ruled out any potential deal.

FINANCIAL PERFORMANCE SUFFERS SLOWDOWN

Like other companies in the luxury goods industry, Armani's latest financial accounts showed the impact of a slowdown in spending.

Net revenues fell 5% to 2.3 billion euros in 2024, while core profit (EBITDA) tumbled by 24% to 398 million euros.

In comments alongside the numbers, Giorgio Armani underlined his determination to continue to develop a business which is relatively small in scale compared with the French giant LVMH and other rivals such as Gucci-owner Kering and Prada. 

"I chose in any case to invest in projects of great symbolic and practical significance, which are fundamental to the future of the company," he said in the results statement in July.

These investments included the renovation of flagship stores including the Madison Avenue building in New York, Emporio Armani in Milan, as well as spending on the new Palazzo Armani in Paris and taking e-commerce management in house.

The group is mainly focused on Europe, which generates almost half of its revenues, a far higher proportion than for other luxury brands. Americas and Asia Pacific account for around one fifth each. 

The group had 570 million euros in net cash at the end of 2024 after stepping up investments.

ARMANI LIEUTENANTS COULD STEP UP

The Armani group was bound up with its founder, who maintained a tight control over both the creative and managerial aspects until the very end. 

On the creative side, his niece Silvana worked alongside Giorgio Armani in designing the women's collections, while Dell'Orco collaborated with him on the men's collections. 

This could ensure a certain continuity in design.

At a managerial level, the group would need to fill the chairman and CEO roles that were held by Giorgio Armani himself.

Among obvious internal candidates to fill the gap are long-time executives Giuseppe Marsocci, Deputy General Manager and Chief Commercial Officer, and Daniele Ballestrazzi, Deputy General Manager and Group Chief Operating and Financial Officer. 

($1 = 0.8559 euros)

(Reporting by Elisa Anzolin; Editing by Keith Weir and Ros Russell)