MILAN, Sept 4 (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)