Discussion: The State of Kering

[Melancholybaby]

But it's “fine knit” and a runway piece. A bargain if you think about it!

 

[style_expert]

At this point the new Gucci is just a car crash happening in slow, slow motion... It takes a lot to make that many strategic and creative mistakes in a relatively short period of time.

 

[george5]

considering how they treated and let go Hedi, only to replace him with a cosplayer that does nothing but recycle his old patterns, I'm absolutely delighted to see how this conglomerate has been going downhill since he left.

 

[gallianostan]

death to kering. may it be a slow and painful affair

 

[LadyJunon]

considering how they treated and let go Hedi, only to replace him with a cosplayer that does nothing but recycle his old patterns, I'm absolutely delighted to see how this conglomerate has been going downhill since he left.

Hedi's departure was messy, but at least they didn't fire his entire studio team, like they did when Ghesquière left Balenciaga.
Translation of a part of Julien Dossena's interview for Harper's Bazaar:

At Balenciaga, I had already switched to free-lance, because I was already thinking of this project. It was six mois before Nicolas Ghesquière left, so it was like a sort of pre-departure. But when Nicolas left, Balenciaga fired his entire team, it was quite brutal. I had gotten enough time to continue that project.

 

[Nimsay]

guys. Youre gonna make kering send another intern to cause strife and get people banned….

 

[LadyJunon]

guys. Youre gonna make kering send another intern to cause strife and get people banned….

Wait, that's happened before?

 

[Nimsay]

Wait, that's happened before?

It hit me the other day in my steam sauna as I was zoning out. Right after we started going hard on Keeing we had two people show up causing lots of strife on the boards. TBH IDK if anyone was banned bc I really dont pay attention like that. I do know that is what marketing people do to control online discussions though.

 

[KoV]

While we discuss Kering’s lack of patience (which is warranted given their recent decision making!) it strikes me that maybe it’s a pot-meet-kettle situation. Sabato and Gucci were written off by some here after 1 womenswear show. That show and the subsequent one haven’t blown me away, and their S/S 24 campaign was less than memorable, but I also don’t think they were terrible or embarrassing. Overhyped and underwhelming, for sure, but not embarrassing. There’s a certain primal joy in piling on the negativity when a brand/designer has taken a hit, it can feel like one has a voice/impact/power, so I get it. But expecting a masterpiece right out of the gate that course-corrects a multi-billion dollar conglomerate of multiple troubled brands with a single season is quite the tall order, if we’re being real.

For me, despite lacking a “wow” factor, it’s served as a palate cleanser and I’m looking forward to seeing what they do next. All it takes is one collection and one campaign to shift the narrative, and I’m not ready to write off Ancora as a failure just yet. This is a small piece of the puzzle, but I was impressed with the outcome of what they produced for some stars at the Grammys, creating what I consider some of the best looks I’ve ever seen on celebrities with as divergent personal styles as Taylor Swift and Miley Cyrus.

 

[LadyJunon]

While we discuss Kering’s lack of patience (which is warranted given their recent decision making!) it strikes me that maybe it’s a pot-meet-kettle situation. Sabato and Gucci were written off by some here after 1 womenswear show. That show and the subsequent one haven’t blown me away, and their S/S 24 campaign was less than memorable, but I also don’t think they were terrible or embarrassing. Overhyped and underwhelming, for sure, but not embarrassing. There’s a certain primal joy in piling on the negativity when a brand/designer has taken a hit, it can feel like one has a voice/impact/power, so I get it. But expecting a masterpiece right out of the gate that course-corrects a multi-billion dollar conglomerate of multiple troubled brands with a single season is quite the tall order, if we’re being real.

For me, despite lacking a “wow” factor, it’s served as a palate cleanser and I’m looking forward to seeing what they do next. All it takes is one collection and one campaign to shift the narrative, and I’m not ready to write off Ancora as a failure just yet. This is a small piece of the puzzle, but I was impressed with the outcome of what they produced for some stars at the Grammys, creating what I consider some of the best looks I’ve ever seen on celebrities with as divergent personal styles as Taylor Swift and Miley Cyrus.

My huge gripe with Sabato’s Gucci is how obvious the corporate meddling is behind his tenure. It shows, because their brand messaging is obscenely inconsistent and contradictory for what they’re trying to market as a “reboot”:

• a mature, seductive start with the Werbowy campaign and the Ancora red
• super youthful and girly with the debut runway show
• an “everyman” style for the Valigeria and Horsebit campaigns
• back to Tom Ford for the “Notte” collection and Holiday campaign
• 90s NYC vibes for the SS24 campaign
• Tiktok f*ckboy aesthetic for the debut men’s show

Sabato’s Gucci talks a lot, but is saying absolutely nothing other than “Buy me, before my sisters and I get devoured by LVMH!”.

 

[donyan]

I looked at the website yesterday , just curious about the actual pieces, seeing them in the cold light of day as products to buy they seem very basic. Beautifully made but so simple I'm not sure if they inspire the desire it needs to spend this much money. I am really rooting for him but I'm not so sure anymore that this will actually work. And it does feel as if too many decisions here are taken by too many different people, resulting in something that seems to want to tick all the boxes without creating emotion or desire, an accountant's idea of a luxury brand. Is this enough for a brand like Gucci?

 

[yslforever]

Gucci Sales Down 20% in First-Quarter, Kering Forecasts

Ahahah (sardonic laugh). It's much worse than expected.

 

[gallianostan]

Gucci Sales Down 20% in First-Quarter, Kering Forecasts

Ahahah (sardonic laugh). It's much worse than expected.

RIPPPPPPP

 

[LadyJunon]

The summary:
- Kering's sales were down 10% this quarter due to a 20% drop at Gucci, which accounts for more than half of their revenues and two thrids of their operating profit
- Kering states that this is due to their brand elevation strategy, which is a sharp shift away from the aspirational model of the Michele-Bizzari era
- Analysts doubt whether the more subtle approach of Sabato's vision will be strong and interesting enough to excite customers
- Gucci's topline is also deep in the red with blame being placed on operational holdups, such as collection/product releases and store redesigns
- Some analysts are calling for the replacement of Jean-François Palus as CEO, hinting towards Saint Laurent's Belletini due to her exacting approach

The full article:

Can Gucci’s Turnaround Plan Still Work?
This week, Kering flagged sales were down 20 percent at its flagship brand, knocking confidence in the group’s turnaround strategy. ‘A more drastic solution is required,’ one analyst wrote.

By ROBERT WILLIAMS
22 March 2024

BoF PROFESSIONAL
On Tuesday, Kering warned investors its sales were down 10 percent this quarter, mostly due to a 20 percent drop at flagship label Gucci, which accounts for more than half of the French group’s revenues and about two-thirds of its operating profit.

In recent calls and presentations, Kering had prepared markets for another lacklustre year as it works to give its brands a more timeless, upmarket positioning.

But Gucci’s sales performance was far worse than expected: most analysts had forecast revenues would decline by around 4 percent this quarter, with the most pessimistic among them projecting a 10 percent drop. On Wednesday, Kering shares plunged 12 percent in Paris trading, wiping €6.3 billion off the company’s market value.

With sales in free fall, Gucci and Kering face mounting concern about whether the company can execute on a long-awaited turnaround at the Italian megabrand.

Last year, the group replaced both creative director Alessandro Michele and CEO Marco Bizzarri, who had piloted Gucci through a phase of explosive growth leveraging a radical, maximalist image overhaul and a commercial strategy that had leaned heavily into accessibly-priced luxuries like little camera bags, low-top logo sneakers, bucket hats, logo tees and collaborations with sportswear brands like The North Face and Adidas.

After growth sputtered during the pandemic — with consumers flocking to blue-chip luxury brands seen as less likely to go out of style than fashion-driven Gucci — Kering has sought to push the brand in a more stable, upmarket direction.

The group has hired a behind-the-scenes designer from Valentino, Sabato de Sarno, whose first collections for Gucci have aimed to usher in a more dressed up, sexed up notion of glamour that’s in step with how many cool, young women want to dress today.

His early shows have provided a palette cleanser after Michele’s off-kilter aesthetic, which attracted super fans as well as plenty of detractors. But the jury is still out on whether De Sarno’s more subtle, sartorial approach will supply a brand story that’s strong enough to get customers excited about Gucci and into stores.

That the brand’s topline has gone deep in the red is hardly a promising sign. But operational hold-ups and waning interest in Gucci’s former aesthetic are also to blame: six months after his first show, De Sarno’s designs still make up less than 5 percent of the assortment in stores, and only two flagships have been converted to the brand’s new store concept.

Gucci is also trying to reboot itself in a deteriorating climate for high-end brands. US credit card spending on luxury goods declined 15 percent last month, following a 19 percent year-on-year drop in January, according to purchasing data from Citi.

The key Chinese luxury market also remains sluggish as the country navigates slower economic growth and depressed equity and real estate values. Kering’s revenue warning flagged poor performance in the Asia-Pacific region as a key challenge for Gucci.

“Kering’s news raises a lot of questions, mainly, have the Chinese fallen out of love with Gucci? Why, and is it fix-able?” Citi analyst Thomas Chauvet said. While plenty of brands are currently struggling with cooling luxury demand, the severity of Gucci’s slowdown suggests there are specific maladies at play. Indeed, the latest numbers show the rest of Kering’s portfolio is broadly flat, which is a bit better than markets expected, according to Chauvet.

Most analysts agree more time is needed before gauging the success of designer De Sarno and new CEO Jean-François Palus’ efforts. But less than a year into the new team’s tenure, some have begun calling for shakeups to the strategy and team.

“A more drastic solution is required,” RBC analyst Piral Dadhania said, suggesting that the company may need to take more aggressive steps to clear old product (Gucci stopped markdowns in stores in 2016).

A new CEO may also be needed: “Despite Kering’s insistence that Jean-François Palus is the right interim CEO for Gucci, the market does not agree,” Dadhania wrote.

As the longtime managing director of Kering, Palus has managed the group’s fashion holdings from a distance for years. But he is seen as having an insufficient track record in the hands-on business of operating a fashion brand.

Saint Laurent’s chief executive Francesca Bellettini is also helping to oversee the turnaround in her new role as the group’s deputy CEO, but it’s hardly guaranteed that her exacting approach to brand building and distribution can be extended across multiple brands.

For now, Gucci’s gone “out with the old,” but customers are still waiting for the new.

Source: BoF

 

[LadyJunon]

The summary:
- Kering's sales were down 10% this quarter due to a 20% drop at Gucci, which accounts for more than half of their revenues and two thrids of their operating profit
- Kering states that this is due to their brand elevation strategy, which is a sharp shift away from the aspirational model of the Michele-Bizzari era
- Analysts doubt whether the more subtle approach of Sabato's vision will be strong and interesting enough to excite customers
- Gucci's topline is also deep in the red with blame being placed on operational holdups, such as collection/product releases and store redesigns
- Some analysts are calling for the replacement of Jean-François Palus as CEO, hinting towards Saint Laurent's Belletini due to her exacting approach

All this does is heavily emphasise how short term Pinault's thinking is. Expecting Kering to depend so heavily on Gucci would've required him to transform it into a lifestyle brand like Louis Vuitton. He should've also taken advantage of fragrance and beauty development to push the growth of Saint Laurent and Bottega Veneta to act as secondary supports.

 

[yslforever]

All this does is heavily emphasise how short term Pinault's thinking is. Expecting Kering to depend so heavily on Gucci would've required him to transform it into a lifestyle brand like Louis Vuitton. He should've also taken advantage of fragrance and beauty development to push the growth of Saint Laurent and Bottega Veneta to act as secondary supports.

My little birdie has talked a lot recently :

1) the father is very, extremely, irritated by the son's lack of strategy, about Gucci first, but also about CAA, Creed, Valentino and the extremely expensive real estate acquisitions... and in the very same time, the son refused L'Oréal asking price of €4.5 b for YSL Beauté, which could have been a platform to develop Gucci and BV beauty.

2) they approached 6/7 candidates after Bizarri ousting, but none of the potential candidates wanted the job (one of them even described the position as "un bâton de merde"), and that's the reason why Palus the interim CEO will become permanent CEO (that's was not the initial, proclaimed, plan).
Bellettini did everything in her power to stay at YSL and oversee the other brands, but from afar, and she crosses her finger to NOT get offered the job a second time.

3) they are also disappointed by Blazy, or more precisely by BV performance, but Blazy's 3-year contract expires next November, so they have to take a decision now and have absolutely not clues about what to do... they'll probably renew him to avoid another brand in complete revamp.

4) also disappointed by YSL, which stopped to grow 18 months ago, and by AV two latest collections: they also have absolutely no clue how to produce and sell the F/W womenswear (which is 95% sheer), and same thing for the menswear, which another in-house snake described as "rushed" and "forgettable"... The son is incredibly angered there are no leather goods or bags on the runways, but AV is adamantly against it.

5) they see Mayhoola has a potential ally or white-knight, because Kering can pay the remaining 70% of Valentino with their own Kering stocks, a move that would push Mayhoola as de facto the 2nd largest shareholder in Kering. My little bird and I agree that they should on the contrary beware of the Qataris, once they get a foothold inside Kering they will have a strong position for activism or a takeover.

We didn't talk about Balenciaga, except to laugh at the semi-diplomatic accident with Morocco...

So, indeed LadyJunon, I agree that a lot of the "disappointment" they express comes for their very high expectations on a very-short term.

 

[Nimsay]

I wonder how accurate this gossip is.
1. Kering acquiring YSL Beaute is so crucial. the son may be young and doesnt understand the concept of 'force multipier'. acquriing YSL Beaute is not as fun or glamorous as the CAA which has a really cool looking office building in LA.... however it would transform Kerings presence. 4.5B to put YSL back together is a pittance, they would make that back easily in 10 years and they know it.
2. Right, thats not surprising Kering ha trashed their reputation. Even us lowly internet people are weary of Kering


Just from the outside looking in Kering seems toxic. Culture is top down so we have people getting thrown out basically. Michele was canned like a piece of trssh - this means people are afraid of losing their jobs 24/7. Kering is in the state its in because people are too petrified to give their opinion - creating a culture of yes men. Theyre not getting the best managers so theyre not getting the best decisions.

 

[jeanclaude]

Meanwhile, at Kering HQ:

 

[blueorchid]

@jeanclaude

 

[yslforever]

I wonder how accurate this gossip is.
1. Kering acquiring YSL Beaute is so crucial. the son may be young and doesnt understand the concept of 'force multipier'. acquriing YSL Beaute is not as fun or glamorous as the CAA which has a really cool looking office building in LA.... however it would transform Kerings presence. 4.5B to put YSL back together is a pittance, they would make that back easily in 10 years and they know it.
2. Right, thats not surprising Kering ha trashed their reputation. Even us lowly internet people are weary of Kering


Just from the outside looking in Kering seems toxic. Culture is top down so we have people getting thrown out basically. Michele was canned like a piece of trssh - this means people are afraid of losing their jobs 24/7. Kering is in the state its in because people are too petrified to give their opinion - creating a culture of yes men. Theyre not getting the best managers so theyre not getting the best decisions.

The son is 61. From the outside, or inside, everybody thinks they're quite toxic, see the ousting of Wang, Slimane, Meier, Ghesquière, Pilati, Michele etc... Never on good terms. Potential Gucci CEOs thought the same...