The Gucci brand, which belongs to the French parent company Kering, is currently “not up to expectations”, emphasized Kering CFO Jean-Marc Duplaix when presenting the figures.
(Photo: Reuters)
Paris The luxury fashion company Gucci recorded sales growth of eight percent in 2022 compared to the previous year and had sales of 10.48 billion euros. For many companies, that growth rate would be a win. It’s a big disappointment for Gucci.
The Gucci brand, which belongs to the French parent company Kering, is currently “not up to expectations”, emphasized Kering CFO Jean-Marc Duplaix when presenting the figures. The brand has much more potential. In the medium term, Gucci was aiming for annual sales of EUR 15 billion, as announced in June 2022.
The main reason for the weak sales growth was the difficult fourth quarter of 2022, in which sales of the Italian luxury brand fell by 14 percent. Analysts had only expected a minus of ten percent. The problem is mainly the China business, but also the brand image itself.
The other brands of the luxury group such as Yves Saint Laurent (YSL), Bottega Veneta and Balenciaga developed significantly more strongly than Gucci. YSL alone was able to increase sales last year by 31 percent to 3.3 billion euros. Kering’s total sales grew by 15 percent to 20.35 billion euros in 2022 compared to the previous year, as the luxury group announced on Wednesday.
In the past, Gucci’s growth has been spectacular at times: in 2018, for example, the company recorded a 37 percent increase in sales, and in 2017 an increase of 45 percent.
>> Also read: Richemont weakens in China because of Covid
Last November, Alessandro Michele (50) said goodbye after almost eight years as Gucci chief designer. He had turned the brand into a sought-after trend label with a mixture of romantic baroque style and hippie chic. Wild patterns and colors were his specialty, he also relied on Hollywood glamor with lavish evening gowns. His imaginative style has received several international fashion awards. But due to the weak growth figures, he was recently criticized. In times of crisis, more modesty is required in fashion.
The young Italian is much more reserved in appearance than his exalted predecessor.
(Photo: via REUTERS)
A month ago, Gucci got a new chief designer, the Italian Sabato de Sarno (39), who was previously responsible for the design of the Italian brand Valentino. Kering boss François-Henri Pinault hopes he will give the brand new momentum, which accounts for half of the group’s sales. De Sarno’s first collection is expected in autumn. Then he should prove his talent.
UBS analysts reckon it will take time for Gucci to return to its former success. Overall, Kering remains confident for 2023. The end of the zero-Covid policy in China has led to a very encouraging start to the year, said CFO Duplaix.
Despite war, inflation and the threat of recession, the luxury business is still growing. In the medium term, experts are forecasting strong annual growth of three to eight percent for the industry up to 2030. In the short term, luxury manufacturers could benefit from the fact that China is relaxing the strict corona regulations and that wealthy Chinese tourists can travel to Europe again. If business in China grows, the shares of luxury manufacturers could also increase, the analysts hope.
More: LVMH, Hermès, Kering: Luxury stocks offer good opportunities