Gucci stumbles as Kering gears up for brand's 100th year
French luxury goods group Kering is betting on a marketing drive and fashion events to boost Gucci in the brand's centenary year, after sales at the flagship label missed forecasts and lagged some rivals at the end of 2020.
The Covid-19 pandemic has kept consumers from travelling abroad, dampening luxury sales in big shopping hubs like Paris, Milan and New York, although a rebound in demand in Asia has helped some high-end brands recover in recent months.
Gucci accounts for 60% of revenues and 80% of profits at Kering and has been one of the industry's top performers in recent years. But it faltered in the fourth quarter compared to soaring revenues at rivals like LVMH's Louis Vuitton.
Gucci sales fell 10.3% in the quarter on a comparable basis, when analysts had expected a 4% drop, sending Kering shares tumbling just over 7% at 0910 GMT.
Gucci's hugely successful, quirky makeover under designer Alessandro Michele saw its revenues more than double and profits treble between 2015 and 2019.
But concerns about its slowing performance have fuelled speculation that Kering, which also owns brands such as Saint Laurent, might contemplate major acquisitions to boost its portfolio - especially as larger rival LVMH has just expanded with its $15.8 billion purchase of U.S. jeweller Tiffany.
Kering's billionaire boss Francois-Henri Pinault dismissed short-term concerns over Gucci on Wednesday, saying profitability and sales were set to recover. He added Kering had the financial strength to contemplate purchases and was interested primarily by fashion brands with a global reach, but said the onus was still on building up labels internally.
"We still have a priority for organic growth, starting with Gucci, where we are far away from maturity," Pinault told a conference call with investors, adding Gucci had had a "very, very encouraging" start to 2021.
'ALWAYS ON MODE'
Gucci is the middle of rejigging its calendar of catwalk shows and lining up product launches to coincide with its 100th anniversary in 2021. This contributed to a lull in events at the end of 2020, Pinault said, while the brand is also shifting away from selling via third parties in department stores.
Temporary "pop-up" stores were planned in the coming months, Pinault said, adding Gucci would be in "always on mode" with a steady stream of events. Collaborations with other designers on collections are also planned, as well as revamped handbag designs, like Gucci's "Bamboo shopper" tote bag.
"We believe Gucci management will work hard to open a successful 'new chapter' of growth in the coming year aimed at capturing an older, non-millennial demographic," Citi analyst Thomas Chauvet said in a note.
Kering's overall revenue fell 8.2% to 4 billion euros ($4.8 billion) in October-December, down 5% on a comparable basis and missing analysts' consensus forecast cited by UBS for 1% growth.
Several European countries imposed lockdowns to fight the COVID-19 pandemic during the fourth quarter, adding to retailers' struggles as shops closed.
But Kering's online business grew sharply, acco unting for 13% of group retail sales in 2020, up from 7% a year earlier.There was also a good performance from some smaller brands, with Bottega Veneta growing 2020 sales by nearly 5%.
Group financial chief Jean-Marc Duplaix told reporters that trends across China and Asia as well as the United States remained supportive in the first weeks of the year for the luxury market, although Europe was tougher. But he gave no figures for current trading, including this month's key Chinese New Year holiday.
Enter your email to get our daily newsletter in your inbox
- For her cousin's haldi ceremony in the Maldives, the Ek Villain actor Shraddha Kapoor opted to wear a white and sea blue lehenga choli set and look absolutely breathtaking.
- Vaani Kapoor raises the bar of ethnic fashion this season by stunning in a ₹1.5 lakh olive green sleeveless velvet kurta and sharara from Anita Dongre and we are bookmarking this opulent look for the next wedding
- For a promotional event of her upcoming film, Roohi, Janhvi Kapoor opted to wear a gorgeous floor-sweeping black dress and looked absolutely fantastic.
- Malaika Arora and Arjun Kapoor recently visited Kareena Kapoor Khan to meet the new baby. Malaika looked absolutely stunning in her pinstripe midi dress and matching accessories.
- Bipasha Basu’s sizzling looks from Maldives, set vacation vibes soaring high be it in a tangerine or floral print georgette kaftan by Varun Bahl and we can’t wait to let these contemporary styles jazz up our summer wardrobe without burning a hole in our pockets
- For the shooting of a new advertisement, Mira Rajput wore a gorgeous tile print mini draped ruffled dress. We are fan of this summery look.
- The 78th annual Golden Globe Awards 2021 was held on February 28. While most of the celebrities attended the show from the comforts of their home, some made it to the red carpet and flaunted their gorgeous sartorial picks. Some, however, did not make it to the best dressed list.