He’s running late for a meeting on the other side of Paris, but something unspeakably ugly stops François-Henri Pinault cold.

“Look at this,” he says, bolting from a leather chair in his office overlooking the city’s eighth arrondissement, as the late-afternoon light falls across the floor. Reaching his massive, nearly bare desk in two graceful strides, he snatches a piece of paper tucked into the corner of his leather-trimmed blotter. It’s a small black-and-white brochure, dense with tiny type.

“This,” he says, dangling the folded sheet between two fingers as if it were a dead rodent, “is what is coming inside a pair of Gucci sunglasses. You open this elegant case, and this is the first thing you see.” The brochure was printed, he concedes, by Gucci’s eyewear licensee—one of only two licensees the company maintains—but still it rankles him.“This cannot go on,” says the C.E.O. of PPR, the $23 billion conglomerate whose luxury unit, the Gucci Group, also includes Yves Saint Laurent, Balenciaga, Bottega Veneta, and other brands. “People have to realize that what we are selling is an experience, from beginning to end.”

Such a rant might seem de rigueur for someone in the business of making and marketing beautiful things, but coming from the son of François Pinault—the polarizing entrepreneur and art collector who transformed a provincial timber concern into a retail and luxury giant—it is, in its way, revolutionary. A tacky brochure most likely would have fluttered right past Pinault the elder, now 71, a high-school dropout who made his name and fortune forging deals and shuffling assets, leaping from industry to industry while hired guns oversaw the day-to-day maintenance of the companies he acquired. The soft-spoken François-Henri, 45, who took over Artémis, the family holding company, four years ago, decided in 2005 that he wanted to run PPR as well. He has made it clear that he is a different sort of leader—one who is interested not just in buying companies but in actually operating them.

Until recently, he had done so quietly, prompting whispers that he was too mild to follow his fiery father. But lately, he has shown his own talent for attracting attention, not all of it welcome. In early March, he and actress Salma Hayek ­revealed they were expecting a child and planning to marry; the relationship had been so discreet that even his siblings hadn’t known about it until mid-February. At about the same time, he plunged into secret negotiations with the German family that owned a 27 percent controlling stake in Puma, the world’s third-largest sporting-goods and clothing brand. The resulting $1.9 billion transaction, a pre­lude to a $5.4 billion offer for the remaining shares, was announced the Tuesday after Easter weekend—just as the paparazzi were finishing their initial assault on his personal life.

In light of his earlier moves—replacing most of the management team his father had assembled, including longtime family confidant Serge Weinberg, who preceded François-Henri as C.E.O. of PPR; selling off Printemps, the mass-market department store chain that was the second P in PPR; and, perhaps most controversially, emphasizing the brands themselves over the diva designers at his most prestigious fashion houses—one thing is clear: This is not his father’s PPR.

“Sometimes matters of style can be deceiving,” Pinault says, throwing back his fourth espresso of the day. “Remember, you never want to be too obvious.”

Now Pinault must show that his plans will work. The challenges are formidable. In early 2006, he set a goal of doubling Gucci’s sales, to $4 billion a year by 2011. He’s trying to fix the underperforming brand Yves Saint Laurent, which was $268 million in debt when the ­Gucci Group purchased it in 1999. And while Puma has been growing for more than a decade, its future depends on the loyalty of the fickle hipsters who were instrumental in its rise.

Pinault must balance these priorities without neglecting the company’s four mass-market retail operations: Fnac, a book and electronics retailer; Conforama, a household-furnishings chain; mail-order catalog Redcats; and CFAO, which distributes cars and pharmaceuticals in French-speaking Africa. These slow-growing divisions drag PPR’s operating margin down to 7 percent—compared with about 20 percent for such pure-­luxury giants as LVMH and Cartier parent Richemont—prompting analysts to routinely ask Pinault when he plans to dump those companies in favor of glitzier brands. But he has repeatedly insisted that PPR’s non-luxury units, which account for 80 percent of the firm’s revenue but only 57 percent of its operating profit, are a hedge against the vagaries of the go-go fine-goods market.

Pinault knows the retail businesses well, having worked at most of them since joining PPR straight out of business school in 1987; he has even run two, Fnac and CFAO. His father didn’t speak of succession during those early years, though François-Henri, one of three children and the eldest son, was always the presumed choice. He spent his boyhood and teenage years in Brittany, just a few miles from where his father was raised. It was an upbringing focused on tennis and soccer rather than empire building, and that was what Pinault père wanted for his kids—a life more genteel than his own bourgeois background. Besides, his son was by nature easygoing, with little of the older man’s canned heat and carnivorous drive. “We just thought he was a regular guy who liked sports and girls,” says Christophe Cuvillier, who met the younger Pinault in business school and is now C.E.O. of Conforama. “It wasn’t until someone noticed he had a better car than we did that it occurred to us who his father was.”

But during those years of ricocheting through PPR’s divisions, François-Henri says he developed a passion for the mechanics of running a conglomerate. His father began to hint about the future, enlisting a group of 10 outside C.E.O.’s to formally monitor his son’s progress throughout the 1990s. Then, on a misty Friday night in April 2003, the two men settled into their usual corner banquette at L’Ami Louis, the bistro they visit monthly, not just for the escargot but because the chef-owner is from their ancestral hometown. Before the wine arrived, François Pinault dug into the pocket of his suit, pulled out a set of engraved interlocking gold rings, and pressed them into the hand of his astonished son, then 41. On one ring was inscribed "François 1962–2003"; on a second, "François-Henri 2003." The third ring was left blank, presumably for François-Henri’s son, also named François, now nine years old.

“He told me that by Monday he would be gone, that all his things would be removed from the office, and that I would be running everything—just like that,” Pinault says now, turning the rings, which hang from his key chain, over and over in his hands. “Everything” meant Artémis, the family holding company (named after the goddess of hunting), which was ­instrumental in bringing rapacious, American-style private equity investing to a somewhat reluctant European business community. Its few long-term holdings include Bordeaux vineyard Château Latour, Christie’s auction house, and a controlling stake in PPR.

“I couldn’t believe it,” Pinault continues. “He was barely 67 and totally vital. I said, ‘Why would you possibly want to do this?’ He told me it wasn’t a matter of what he was ready for; it was that he was putting himself in my place, thinking that if he were 41 like I was, he would want to be running the company, not waiting around for his ­father to get too old or die.”

“Tom is in many ways a genius, but there were some things he simply could not do,” Pinault says, picking at a plate of croissants after a breakfast meeting in his office. He is wearing, as usual, a sleek navy suit and talking, of course, about Tom Ford, the big-living, shirt-unbuttoned-to-his-navel Texan who, with an Italian lawyer named Domenico De Sole, spent the ’90s making Gucci synonymous with sensuous modern luxury. Gucci’s investment bankers approached the senior Pinault in 1999, when they were seeking a white knight to thwart a creeping takeover attempt by rival Bernard Arnault of LVMH. In the frenzied 18 months that followed, Pinault created a luxury division around Ford by acquiring controlling stakes in such brands as YSL, Sergio Rossi, Boucheron, Bedat & Co., Bottega Veneta, and Balenciaga.

But Ford couldn’t replicate his Gucci magic with the other labels (most conspicuously YSL), and one of the first things the new boss did after the dinner at L’Ami Louis was to jettison the designer by declining to give Ford a new contract guaranteeing the total creative control he was demanding. The fashion world was appalled. “Over time, we would learn that there are seven stages a person goes through when Tom Ford leaves Gucci,” Ian Frazier wrote in a New Yorker piece that skewered the hysterical reaction. “The first is shock and rage. The second is also shock and rage, with rage starting to predominate. The third is pretty much all rage; I forget the stages after that, because I’m still partly in shock.” But fashion insiders weren’t joking when they predicted that Gucci would die a long and very public death.

That has not happened. After a slump that stretched into 2005, Gucci’s revenue rose 16 percent last year to more than $2.7 billion, helped by a cooperative economy and growth in China, Russia, and other emerging markets. Gucci, always the backbone of PPR’s luxury group—its profits subsidize losses in some of the other brands, especially YSL—reported operating margins of nearly 30 percent in 2006.

To say that Gucci’s current designer, Frida Giannini, is no Tom Ford is, to Pinault, precisely the point. The 34-year-old Roman, who wears her blond hair long and straight and often dresses in jeans and a black turtleneck (not a double-G logo in sight), is among the most understated personalities in a business that feeds on—and spits out—gigantic egos. “I am just not the kind of person who wants to be the embodiment of the brand,” she says, during a conversation in her Milan satellite office several hours before a recent show. “I serve the brand; I take care of it.”

Giannini, who had been the accessories designer under Ford, has been in charge for less than two years. Amid the turmoil that ensued after Ford left, Giannini was one of three designers who split his duties, an arrangement that proved disastrous. Early last year, after reams of snarky press and plenty of fractious internal politics, Giannini was given the entire label and paired with brand C.E.O. Mark Lee, a protégé of De Sole’s. “We lost a lot of time,” Pinault concedes.

When Ford was running Gucci, the clothing didn’t compromise. You were either a Gucci woman—strong and sexy in menacing black—or you weren’t. ­Giannini has both deepened and widened the brand, adding colors and patterns, updating some iconic designs from Gucci’s heyday in the 1960s and, in general, softening the silhouette. Most of Gucci’s 220 boutiques, where more than 70 percent of the brand’s revenue is booked, have been revamped to seem more airy and playful, a radical change from the monochromatic power emporiums Ford designed in the 1990s.

To Pinault and Robert Polet, a former Unilever executive who is now C.E.O. of the Gucci Group, the label’s recent success is proof that a diva designer can be a liability—a lesson that has been reinforced at Bottega Veneta. The high-end brand has been a sleeper success for PPR in recent quarters, reporting $350 million in revenue last year, up from $56 million in 2002, with 21 percent margins. Its sales are now higher than YSL’s. Tomas Maier, the taciturn German who designs the line, has no interest in creating a mythos around himself, says Pinault. “He never talks about himself as the center of the world. It’s always the people, the materials.”

Pinault and Polet’s audacious plan to double Gucci’s sales in the next four years depends almost entirely on the continuing health of luxury-goods markets around the world. “Anyone who says they know what the demand will be in, say, India for these kinds of goods in three or four years isn’t being honest,” says analyst Antoine Belge, who follows luxury companies for international bank HSBC. But PPR is charging ahead. Gucci plans to have 16 stores in China by the end of the year. A Mumbai location will open in October. And by early next year, a new 45,000-square-foot Manhattan flagship will be unveiled on Fifth Avenue.

Such an aggressive strategy is not without its dangers. Fashion critics and magazine editors, who have so profound an impact on fashion companies that they are virtually part of the manufacturing chain, have their doubts about how long Gucci can ride on its reputation. While some critics have politely applauded Giannini’s designs, they have also taken potshots at her low profile in the industry and damned her clothes with faint praise for their “wearability,” a mortal wound in high-fashion circles. The catch-22 of having an easygoing designer willing to help you do what it takes to go global, versus a superstar control freak, is that in a few years, there could be little left to control.

“Their goodwill, their cachet is trickling away,” says David Wolfe of the Doneger Group, an independent fashion consultancy that predicts trends for retailers. “It’s a little like Versace after Gianni’s death. Frida hasn’t been able to reestablish consistency. They are going to eventually come to a breaking point.”

Pinault seems acutely aware of the delicate balance. When he is told that Guy Trebay, an influential critic for the New York Times, recently wrote that ­Giannini is more of a stylist than a designer, Pinault looks as though he has been hit in the gut with one of Gucci’s massive logoed totes. “That’s terrible,” he gasps, leaning back in his chair. “I would hate for her to hear that. I think she’s very, very talented. But really, I don’t think that is the future, that opinion of her.”

 
It's unusually mild for Paris in January, but Valérie Hermann, the C.E.O. of YSL, is too wound up to enjoy the weather. The men’s show for her money-losing label is a week away, and today is casting day; the upper floors of the YSL atelier, in a mansion on Avenue George V, are thick with grungy, beautiful boys and rolling racks of clothing. The women’s show will follow in about a month. And, as if that weren’t enough pressure, Pinault is now sitting with Hermann’s top aide at a conference table in a black-and-white salon.

Pinault doesn’t visit often—his brand C.E.O.’s report directly to Polet—but he does tend to watch YSL a bit more closely than the other labels. Hermann was his business school classmate, and YSL holds a special place in his heart. Along with Hermès, Dior, and Chanel, the brand is virtually considered a national treasure. But what’s perhaps most important is that YSL—for which his father paid what analysts considered a far-too-rich $1 billion—is deeply, famously in the red. Saint Laurent himself, brilliant but temperamental, had let the label founder in the last few years he owned it.

The YSL line is now designed by Stefano Pilati, a 41-year-old Italian who worked under Ford. Last year, it brought in $260 million; breakeven is $400 million. Pinault will not name a year, much less a quarter, when he expects to reach that goal. Pilati, tattooed from wrist to shoulder beneath his cashmere sweater and ascot, has not had an easy glide down the runway. His first collections were savaged for their incoherence and lack of fresh ideas. But recently the brand has gained some traction. YSL’s sales are up nearly 20 percent since last year, boosted by an equivalent increase in the company’s advertising and promotional budgets. Still, the brand has a long way to go, and Pinault is well aware that these are the best of times. He knows YSL will have to pull its weight even when it becomes a lot harder to sell $4,900 ostrich handbags and $2,900 pearl-adorned heels.

“We have some really great numbers to show you,” Hermann tells Pinault, as her aide fires up a PowerPoint presentation. But what flashes up on the screen are not sales figures. Instead, these data chart the increase in paparazzi shots of celebrities—Nicole Kidman, Jennifer Lopez, Sienna Miller—carrying YSL handbags that were “placed” with them for free. Even at the most successful fashion houses, accessories—handbags, scarves, wallets, sunglasses, and perfume—account for as much as 80 percent of revenue, and such photos can elevate a new product to hot-bag status.

“The really great thing,” Hermann continues, “is that the period between when we place the bag and the point at which they are photographed carrying it has shrunk from nearly 12 weeks to less than a month. It’s a real breakthrough.”

Pinault takes a deep breath. “Interesting,” he says, pulling slightly at his lower lip, “but do we track precisely what the effect of all this is on revenue? Do we benchmark the other brands? I mean, does it work at the same increments for Gucci and Dior? Do we have numbers?”

As the PowerPoint projector whirs, Hermann contemplates her boss’s flurry of questions. How does one quantify the importance of Cameron Diaz slinging YSL’s new Tribute tote in black crocodile? After a moment, she cocks her head and adopts a playful tone. “You know how much I like it when you visit,” she tells him. “But you always end up asking about profit and results. You really need to think of something else to discuss or I’m not going to invite you back.”

The first thing Pinault says about Jochen Zeitz, the C.E.O. of Puma, is that the guy once turned him down. Back in 2004, Pinault tried to hire Zeitz to run the Gucci Group. Zeitz declined, and the job went to Polet. When Zeitz hears that Pinault has acknowledged the episode to a reporter, he is shocked. “He said that?” Zeitz asks. “Well, I guess that is the sort of thing he would do.”

Pinault is not always so forthcoming. In the months leading up to the Puma deal, there had been plenty of speculation that he was shopping, especially after he unloaded Printemps for $1 billion last year. First, he hinted that he was eyeing Bulgari, the Italian jewelry company; another rumor had him looking at Hermès. But then in March, he told analysts that he planned to stick to “organic growth” instead of seeking acquisitions.

That was a head fake. The truth is that he was already culling a list of targets in the “branded retail” category. One was Esprit, the $17 billion apparel company based in Hong Kong. But it was Puma, with its two coveted assets—an enduringly hip image and Zeitz—that won out. The deal took about a month from the first call to the 4 a.m. time stamp on the final signature. “Speed,” says Polet, “is a cultural thing with the Pinaults.”

Puma bridges the gap between the two disparate strains within PPR: mass retail and luxury. The brand won’t be absorbed into the Gucci Group—it will be an autonomous unit—but Pinault sees the potential for cross-pollination. In fact, that type of collaboration had happened even before the deal: Gucci Group’s Alexander McQueen has designed shoes for Puma. Pairing pedigreed designers with street brands is a trend in fashion—John Varvatos has a line of Converse sneakers, for example—and Pinault envisions more of such integration. “There is room for high-end product if you are careful to preserve the core professional aspect of it,” he says, referencing Puma’s traditional soccer-gear business. “You don’t want to make it just trendy or all style.”

Buying Puma has altered PPR in another intriguing way: It has eased the rivalry with Bernard Arnault. For more than a decade, clocking the bitter feud between the senior Pinault and the 58-year-old chief of LVMH has been one of Europe’s most popular spectator sports. Arnault kept PPR in court for two and a half years over the Gucci deal, accusing François Pinault of such underhanded tactics as secretly paying off Ford and De Sole with stock options. (The charges were never proved.)

But buying Puma—instead of, say, Bulgari—has eased the tensions between the two companies, if not between the two founders. Inside LVMH, there is a widespread sense of relief; to its executives, the Puma acquisition goes a long way toward differentiating the two conglomerates. The Gucci Group may still be LVMH’s biggest competitor, but now that PPR has made it clear that it does not aim to become a pure-luxury company, there is less head-to-head competition on a corporate level. ­François-Henri himself is regarded within LVMH as a balm as well; Bernard Arnault and François Pinault may still harbor animus for each other, but the younger Pinault is viewed as another man entirely.

François-Henri says he’s eager to distance himself from the bitterness, but he doesn’t discount how much it has hurt his father. “What LVMH did—no, what Bernard Arnault did, going to court all those years, making accusations—was horrible,” he says. Arnault declined to comment on the dispute.

In what might be lampooned as a typical French preoccupation with matters cultural and aesthetic, Pinault says that these days his father is more bothered by Arnault’s relatively newfound passion for art than by the old business wounds. Since 2000, Arnault has significantly ramped up his collection; he’s impinging on François Pinault’s territory. Both men spent much of the early part of the decade trying to open private museums in and around Paris, but only Arnault succeeded in obtaining the necessary approvals. After years of haggling with officials over the use of an island in the middle of the Seine, in 2006 the senior Pinault packed up his Damien Hirsts and opened the Palazzo Grassi in Venice.

“Bernard Arnault is a wonderful pianist who is married to a professional [musician Hélène Mercier], so why doesn’t he finance his own orchestra?” says François-Henri, with an uncharacteristic flash of irritation. Hearing the pitch of his voice, he laughs. “Of course, business often comes down to the egos of two people, but if you can’t get past that, it destroys you.”

Pinault’s Audi still idles at the curb, waiting to ferry him to his meeting across the city, but that hideous sunglasses brochure requires immediate attention. He glances at the Breitling watch on his wrist—one of more than 60 timepieces he owns—and moves to make a call. But before he can dial, the phone rings softly in the outer office, and one of his assistants pokes her head in.

“Père,” she says softly.

Pinault and his father speak daily; on the weekends, they often speak more than that. They converse in a quiet shorthand, punctuated by brief, sharp laughs. It is clear they enjoy giving each other a hard time.

The older man remains deeply involved in Artémis’ investments, and speculating about his ongoing strategic role has become a parlor game in some European business and social circles. But it’s a game that no one except the two men themselves could win. Though François-Henri’s public relations staff goes to great lengths to prove that he is in total control, the C.E.O. himself seems comfortable with more porous borders.

Father and son get together at least weekly when both are in town. François-Henri has taken over the four-story mansion his father and stepmother ­vacated last year when they bought an even grander place nearby. For now, he drapes his gym clothes over the chinoiserie, but he is renovating in a spare, ultramodern style, including a cantilevered desk by the architect Zaha Hadid. “I like to tease my father, to tell him I’m getting rid of every bit of the 18th century,” he says. At this point, it’s unclear how much time his fiancée, who’s based in L.A., will spend there.

Lately, the two men have been talking even more than usual, because they have so much to talk about: the Puma deal, the new baby, how François Pinault trounced the Guggenheim and won a chance to convert an old customhouse in Venice into a second museum for his collection. (It was at the April 2006 opening of the Palazzo Grassi that ­François-Henri was introduced to Hayek.)

He chuckles as he hangs up the phone. “My father likes to throw bombs; he is a provocateur,” he says. “In meetings, he likes to test people by giving them the worst-case scenario: ‘What will happen if no one buys luxury anymore?’ I prefer a more collaborative style.”

The ease of their relationship seems hard to believe, considering how much money is at stake and how large the father’s image has loomed, both in France’s collective psyche and in that of his son. The history of dynastic empires is littered with patriarchs who don’t know when to pack it in and children who battle their familial legacy and lose. For every graceful story about the Rockefellers, there are a dozen tawdry ones about the Murdochs, the Mondavis, the Redstones. The mixture of blood, money, ego, and entitlement simply seems too combustible for most clans to handle.

To François-Henri Pinault, there is no mystery about why his family has thus far escaped similar pitfalls. People may say—and they often do—that his father does not play by the rules; that he has made business in Europe less civilized; that he is nothing but a “wandering merchant,” as one supporter of the Guggenheim’s bid in Venice recently called him in print. But it’s hard not to be struck by the way he has allowed his son, a man who in most ways could not be more unlike him, to flourish.

“People ask me if I am competitive with him, if it is hard to be his son,” Pinault says. “That seems like such a strange question to me. How could I possibly compete with him? He built this from nothing. You would drive yourself crazy if you judged yourself by that. All you can do is to look inside and see what it is you can give, what you are good at. If you are lucky, you have a father who wants you to do that. I’m lucky.”