Kering lays the groundwork for Gucci's relaunch after a disappointing 2022
Gucci ended 2022 on a disappointing note with a derisory increase in turnover of 1% on a comparable basis (+8% in published data), to 10.5 billion euros. Its operating profit was constant. Considered as the main source of profits for the French luxury group, the Italian house wants to turn the page and is working on its revival by rethinking its style and focusing on timeless products, redesigning its shops and elevating the brand, while it has also reviewed its organisation, pending the arrival of its new creative director Sabato de Sarno.
The departure of Gucci's emblematic designer Alessandro Michele in November was not enough to halt its decline at the end of the year, with sales collapsing by 14% on a comparable basis compared to the same period a year earlier, and a 15% drop in its own shop network alone. Admittedly, the basis of comparison with the previous year was very high and Gucci's strong exposure to China, where sales were heavily impacted by Covid at the end of the year, partly explains these results. But as Kering executives said, the performance "did not live up to the expectations and potential of the brand."
Kering expects a lot from Sabato de Sarno, a designer unknown to the general public, but who has worked for some of the biggest fashion houses including Prada, Dolce & Gabbana and Valentino, where he supervised the men's and women's collections until recently. François-Henri Pinault, however, was keen to point out that the Italian designer is not "a second choice. Gucci excites all the best designers in the world and we have obviously been extremely solicited." The luxury giant's CEO went on to detail the selection process for designers within the group. "To select the candidate, we have a team of people from Kering and people from Gucci. We first make a creative profile of the house, a description of the house's codes. It is with these elements that we define the creative profile of the designer we are looking for. That's the first step," he said.
"When we select the candidates, we ask them to produce two projects. One to express their creative universe. And a second one, which is very important for us, where we give them elements of the house's archives with the idea of seeing how they interpret this heritage with their creativity. Sabato was unanimous in his vision of modernity but also in the way he interprets Gucci's heritage. He is someone who has fifteen years of experience in women's, men's and accessories. And in the way he does things, he is very comfortable with teamwork. We have an organisation that has been transformed in the last year, to which the creative director has to adapt and not the other way around."
Sabato de Sarno will not be the only driver of the relaunch, contrary to what was done with Alessandro Michele, whose flamboyant and eclectic vision alone embodied the brand's universe with a very strong fashion orientation. With the new designer, Gucci wants to favour "a team approach", underlined the CEO of Kering, during the conference with analysts.
In fact, the arrival of the Neapolitan designer, who was chosen "for his great capacity to bring modernity by capitalising on Gucci's heritage", does not entail any changes in the organisation, which was reviewed last year around three pillars: product strategy with the arrival of Maria Cristina Lomanto as the brand's general manager; communications and brand strategy with the appointment of Susan Chokachi, director of brand and customer (both of whom are also Gucci's executive vice presidents); and the studio, centred around two axes, namely fashion products and timeless products.
"Having a creative director does not prevent us from having very strong talent in each category, which is women's ready-to-wear, men's fashion and accessories. We really want to have a very strong team and Sabato de Sarno as the conductor. You can't have just one head. It would be crazy to do that with the current size of Gucci," says François-Henri Pinault. "It is important to maintain the consistency of the brand's expression by following its creative vision, while ensuring that it is fuelled by the right product strategy and consistent communication and image."
The new creative director, who is due to arrive in the second quarter, will sign his first collection in September 2023, with products arriving in shops in early 2024. In the meantime, the label plans to continue investing and operating with a series of events and campaigns throughout the year, starting with the next studio-designed collection, which will be unveiled at a runway show on February 22, followed by a cruise show in May in Seoul. "There will be no big bang in terms of product change. It's not a rupture, but a smooth transition. But Sabato will infuse his new creative direction from the moment he arrives, particularly via capsules. And his work will have an effect from the second half of the year," continues the director.
The group has already initiated Gucci's transformation with major investments that are reflected, according to the company, in the lower profitability of the Italian house, whose current operating income has hardly increased in 2022, to 3.7 billion euros, with a margin falling by 2.6 points in 2022, to 35.6% against 38.2% a year earlier. The strategy initiated last year focuses on categories with untapped potential, such as menswear and luggage, including the opening of a first dedicated shop in Paris.
Gucci "Salons" to appeal to an even more affluent clientele
The idea is to continue and accelerate Gucci's repositioning in a higher segment and in all product categories. To this end, the brand is undertaking major work on its image, notably with an impressive exhibition called Gucci Cosmos, scheduled to run from April to June in Shanghai, retracing the brand's history and conveying the notion of heritage, which is important for attracting wealthy customers. This exhibition will then be extended to other key locations for the brand.
On the commercial side, Gucci intends to clearly reinforce its desirability with this ultra-rich target. It is launching a concept called Gucci Salon, which will welcome its VIP customers. "It is an initiative to recruit an extremely high-end clientele, which we do not have at Gucci, but which has grown enormously in recent years in the world," says François-Henri Pinault. "The concept could be installed in certain shops, or via one-off events. We will have a dedicated location that will open in April on Melrose Avenue in Los Angeles," he explains. "Then in the big flagships, we will dedicate entire floors. In the smaller shops, there will be Gucci Salon spaces. It's a concept that we're going to roll out from this year in all regions of the world". The director says that this development could involve a dozen projects in 2023, particularly in its largest shops, such as those in London and Milan, which will reopen this year, but also Shanghai, Tokyo and Seoul. In these spaces, Gucci will offer its customers products, specially developed over the last two years, with prices exceeding 40,000 euros and going up to 3 million euros, for high jewellery pieces. These products will integrate six very high-end categories, in fine jewellery, clothing, accessories, furnishings, gift items, etc.
As for the offer, Gucci wants to move towards a solid and increasingly adjusted balance between a recognised fashion positioning and products linked to its history and heritage. "It's not one or the other, but both together. This is where Sabato de Sarno will have a key role to play in bringing to Gucci not only his creative vision, but his ability to embrace Gucci's heritage to propel the brand into the modernity it needs," concludes François-Henri Pinault.
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