Discussion: The State of Kering

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PDFSD said:
It's a international sport to trash Hedi´s work :-) so i don't measure the his merits by popular critic like the last show for me was heaven 1980´s trashy redone to the highest HC vibe it's in my top liked shows same Dior by Raf first HC show so precise, i can still watch it every year and it still cool to me both shows had this heightened feeling.
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Hedi did good shows, he has a precise vision and is fabulous menswear and creative director but tbh, from all the praises we had about his work prior to him venturing to womenswear, discovering what womenswear actually looked like from him was probably the biggest disappointment I have ever had in fashion.
And to add injury to insult, I was appalled by how unrelated to YSL his work was. I don’t think he understands the YSL woman at all but his genius is that he is so strong in his presentation that it becomes believable.

The Celine woman and the YSL woman are drastically different in terms of pure core aesthetic. Somehow it all seems related under the umbrella of « Bourgeoisie » and the layer of Hedi’s work.
But I still think he is not a great womenswear designer.
 
Last August Kering bought 49% share of Vhernier, I wonder what happened after....Richemont just got it.
 
kasper! said:
Last August Kering bought 49% share of Vhernier, I wonder what happened after....Richemont just got it.
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Vhernier is in direct competition with Pomellato... Stylistically and same market...
Edit : Pomellato being a Kering brand since 2013... I just assume Kering wanted to avoid a take-over by LVMH so they snatched it first before selling to a less threatening conglomerate.
 
TomBlanksFullFatMiuMiu said:
Kering deputy CEO Francesca Bellettini in conversation with Jo Ellison



www.ft.com

Watch: Kering deputy CEO Francesca Bellettini in conversation with Jo Ellison

Join us at the FT’s Business of Luxury summit for Monday’s closing keynote interview
www.ft.com www.ft.com
Click to expand...

Tbh, she is quite a powerhouse! You could just drink her words as she is aware of her environment.
I like how fairly honest she is even though I think the Gucci question is more complex than « brand elevation ».
 
Lola701 said:
Hedi did good shows, he has a precise vision and is fabulous menswear and creative director but tbh, from all the praises we had about his work prior to him venturing to womenswear, discovering what womenswear actually looked like from him was probably the biggest disappointment I have ever had in fashion.
And to add injury to insult, I was appalled by how unrelated to YSL his work was. I don’t think he understands the YSL woman at all but his genius is that he is so strong in his presentation that it becomes believable.

The Celine woman and the YSL woman are drastically different in terms of pure core aesthetic. Somehow it all seems related under the umbrella of « Bourgeoisie » and the layer of Hedi’s work.
But I still think he is not a great womenswear designer.
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I will take Hedi´s comercial womens wear any day over Vaccarello sexed up version of Hedi recipe, one is original the other copied the home work well.
 
Numbers for those who don't care to read the article:
H1 2023:
Gucci: 5,13b
YSL: 1,58b
BV: 833m
Smaller Houses: 1,86b
Eyewear: 869m
H1 2024:
Gucci: 4,09b
YSL: 1,44b
BV: 836m
Smaller Houses: 1,72b
Eyewear: 1,07b
 
LadyJunon said:
Numbers for those who don't care to read the article:
H1 2023:
Gucci: 5,13b
YSL: 1,58b
BV: 833m
Smaller Houses: 1,86b
Eyewear: 869m
H1 2024:
Gucci: 4,09b
YSL: 1,44b
BV: 836m
Smaller Houses: 1,72b
Eyewear: 1,07b
Click to expand...
It's deserved because the management and shareholders are awfully bad but I feel for the lower-echelon staff that will inevitably let go and for the SAs and stores managers which are left without commissions (and who are already sending resumes around).
Kering had plenty of times to nurture brands the way LVMH did, they absolutely have no vision nor long term strategy, it's quarter per quarter only.
 
yslforever said:
Hedi has never been able to do one sexe-up in his life though. Not everybody is aro-ace.
Click to expand...
Sure but not everything has to be obvious sex or sexy and yet his Celine sells more and he is the original of this retro sleek style adopted by Vaccarello.

I will always love the original of styles much like Margiela is the true version of what Demna is doing i just don't see much value or integrity in it.

For me this counts, but i totally understand others that love it i get it it's more edgy than Margiela version as is Vaccarello more sexy than Hedi , i love original Alaia then the new Alaia but it's more easy to understand sexy with a touch of modern conceptual but its to on the nose for me to be in love or respect it.

I think Vaccarello would be great at Versace its more direct and sexy, i like Hedi´s YSL more especially his last show even Pillati had good moments, YSl needs some brains as well besides the beauty and the sex and paris glamour.
 
BoF's article:
Kering Weakened as Gucci Sales Fall 20%
The French group’s sales fell 11 percent as its Saint Laurent and Balenciaga units also continued to suffer, underscoring the gap with key rivals in an increasingly cut-throat luxury market.

By ROBERT WILLIAMS
July 24, 2024

Kering reported second-quarter sales that fell 11 percent, dragged down primarily by flagship unit Gucci. Sales tumbled by 20 percent in reported terms (and 18 percent on a currency-adjusted basis) as plans to relaunch the label under a new designer and executive team continued to falter.

The group painted a grim picture of the luxury market. Consumers are pulling back their spending on high-end brands after a multi-year surge and the shift is being felt beyond Gucci: Saint Laurent, once the most consistent growth engine in Kering’s portfolio, reported revenues that fell 7 percent on a comparable basis. Sales in the group’s Other Houses unit including Balenciaga and Alexander McQueen fell by 6 percent, while Bottega Veneta reported flat revenues.

Falling sales took a toll on margins. The group’s first-half operating profit fell by 42 percent year-on-year.

While the weak numbers came as no surprise (Kering had warned investors sales would continue to decline in line with the previous quarter), a worsening outlook was unwelcome news. Profits are likely to fall by 30 percent in the second half of the year, the company warned, while offering few promises on when its brands would return to growth.

The group is racing to cut costs, canceling “all store openings that are not immediately essential,” chief financial officer Armelle Poulou said. Those cuts could make it even harder to compete with rival brands and groups who are also suffering, but not as severely.

“We didn’t start the year with this vision for the topline,” Jean-Marc Duplaix, Kering’s deputy CEO for finance and operations, said. “In June, we saw a deterioration of trends; that continues in July.”

Sector-Wide Downturn
Kering’s report follows weak results from rival groups LVMH and Richemont, where reported revenues both slid by 1 percent, as well as from Burberry, whose shares plunged to their lowest level in nearly 15 years following a 22 percent drop in quarterly sales.

Outliers so far include Moncler and Brunello Cucinelli, both of which grew by double-digits, while Hermès, Zegna and Prada have yet to report.

In Asia, the industry is navigating low store traffic and depressed consumer confidence in China, as well as tricky-to-navigate currency headwinds in Japan. Customers from China and around the world have been flocking to the island nation following a steep drop in the yen, but brands are wary of penalizing local customers with drastic price hikes.

In the US and Europe, store traffic remains depressed by inflation and political uncertainty, as well as customers who are no longer prioritizing luxury items as they did during the industry’s post-pandemic boom.

Tourist sales have also been lower than expected in many key luxury shopping hubs from Hong Kong to Paris.

Gucci, Balenciaga
One year into the tenures of Gucci chief executive Jean-François Palus and creative director Sabato de Sarno, a sleeker and more heritage-driven vision for the brand has failed to reignite consumer demand in an increasingly cut-throat luxury market.

Kering says the brand, which accounts for about half of the company’s sales and two-thirds of its profit, is focused on a deep transformation to the organization and that it will take time for that to translate into sales momentum.

The quality of Gucci’s products and the speed with which it brings them to market have improved, deputy CEO for brand development Francesca Bellettini said. Conversion rates in stores remain resilient even amid softer demand.

Meanwhile, De Sarno’s collections align more easily with the brand’s heritage products than under previous management. “We’re working on animation and not the complete substitution of the carry-over line,” Bellettini explained. “New introductions are going to be complementary — the idea is to create new carry-overs while also working to reanimate SKUs that were successes in the past.”

Still, the dismal numbers — with growth roughly 20 percent lower than rival LVMH’s fashion and leather goods division — will make it harder for Palus and De Sarno to convince an already-skeptical market that they can deliver results. If Kering decides to make radical changes, deputy CEO Stefano Cantino, hired in April from Louis Vuitton, could replace Palus in the top job.

With Gucci’s struggles center stage, the group is likely to give Balenciaga more time to bounce back from a damaging public relations scandal that coincided with growing customer fatigue for its provocative aesthetic and communications. Kering confirmed its support for both designer Demna and CEO Cedric Charbit, citing the brand’s prior era of success and positive s
ignals like the sell-out success of its Rodeo bag, a Kelly-inspired purse styled with punk accoutrements.

“Balenciaga is quite resilient,” Bellettini said. “We have full confidence in Demna, Cedric and their team, which has already delivered incredible success in the past and will do so again in the future.”

Operating profit fell by 80 percent for the Other Brands division due to communications investments aimed at relaunching Balenciaga, as well as marketing support for the transition to a new creative director, Séan McGirr, at Alexander McQueen.
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BoF
 
"Kering confirmed its support for both designer Demna and CEO Cedric Charbit, citing the brand’s prior era of success and positive signals like the sell-out success of its Rodeo bag, a Kelly-inspired purse styled with punk accoutrements.
“Balenciaga is quite resilient,” Bellettini said. “We have full confidence in Demna, Cedric and their team, which has already delivered incredible success in the past and will do so again in the future.”"

cd4fbca3a474fdd873d6dd8375035386.gif

pinimg.com
 
The only good thing there is eyewere business. Go Kering beauty!
 
The quality of Gucci’s products and the speed with which it brings them to market have improved, deputy CEO for brand development Francesca Bellettini said.
Sound like cutting corners still, just speak about Quality improvement keep it simple ...can't remember when a luxury brand ceo talks about quality of products and the speed to market .....mmmmm

Meanwhile, De Sarno’s collections align more easily with the brand’s heritage products than under previous management.
Which ones !!!? lol they don't live of from jackies and bamboo´s bags and horsebit loafers what else is classic pre Alessandro ??????)
Also stop talking about the past and previous management because they trippeld the company sales and size

“We’re working on animation and not the complete substitution of the carry-over line,” Bellettini explained. “New introductions are going to be complementary — the idea is to create new carry-overs while also working to reanimate SKUs that were successes in the past.”
Great but should have happen in first season.... but better late than never.
Also carryovers are now mostly Alessandro designs so a real update or re introduction of more true gucci archive pieces will be tested as complementary so: IN one season OUT the next when it does not perform immediately..... while they should be bolder in revamping the lines to create something truly permanent like LV has the speedy alma keep all steamer etc etc Hedi did it at Celine created lines that look like there been at celine for years .
Sounds messy and not clear focus again...time will tell.


I am bored by this brand to be honest even the strategy is lame.
 
There are only very few pieces of clothing available on Gucci.com and everything is as basic as can be. High-priced logomerch and not much else. No magic, no passion, no reason to buy.
 

Despite A 20% Plunge In Sales, Gucci’s Turnaround Has Started​

Pamela N. Danziger
Senior Contributor,Jul 26, 2024,02:07pm EDT

Kering just delivered depressing first-half 2024 results. Group revenues at $9.8 billion (€9.0 billion) were off 11% from same period last year and worse, recurring operating income tanked 42% to $1.7 billion (€1.6 billion).

Gucci’s dismal performance pulled the Group down. Gucci was off 20%, from $5.6 billion (€5.1 billion) last year to $4.4 billion (€4.1 billion) and recurring operating income took a 44% dive to $1.1 billion (€1 billion).

In all regions, Gucci was down as measured by performance in its directly operated stores except Japan, which saw a 12% rise in sales from an uptick in tourist traffic.

But Japan contributes only 9% to sales, so it couldn’t offset an 18% drop in North America and a 15% decline in Western Europe, which represent about one-fourth of sales individually, or the 30% retreat in Asia-Pacific where about one-third of Gucci sales are made.

Kering’s only bright spot was its Eyewear and Corporate segment, which includes the newly-formed Kering Beauté division, with revenues up 23% to $1.2 billion (€1.1 billion). But its contribution to the bottom line was a negligible $110 million (€101 million).

On both the top and bottom lines, Gucci is Kering’s biggest money maker, representing 45% of revenues and 63% of operating income in the first half of 2024.

Gucci’s Reinvention Just Starting​

Chairman and CEO François-Henri Pinault asked for patience while he gets his luxury houses in order, most especially Gucci.

“In a challenging market environment, which adds pressure on our top line and profitability, we are working assiduously to create the conditions for a return to growth,” his statement read. “While the current context might impact the pace of our execution, our determination and confidence are stronger than ever.”

Instant-gratification investors didn’t share that confidence. Kering’s price per share on Euronext Parisreached a high of $322 on Tuesday before reporting and opened at $275 on Thursday, the day after, a 15% drop.

Yet beneath the headlines, Gucci’s promised reinvention is just beginning and the results will shortly begin to show. Pinault and his newly formed executive and creative team, led by Gucci president/CEO Jean-François Palus and creative director Sabato De Sarno, both appointed in 2023, and supported by newly installed deputy CEO Stefano Cantino, who hailed from LMVH, are still learning to play well together.

However, they share a common mission: to elevate the Gucci brand and make it first among equals.

Fall From Grace​

Gucci held that position in 2019 when it was ranked the world’s number two most valuable luxury brand, after number one Porsche and ahead of number three Cartier, number four Louis Vuitton, number five Chanel and number six Hermès, according to Brand Finance.

Now, it stands at number five with Porsche, Louis Vuitton, Chanel and Hermès above it. But sometimes, you must take a step or two back to leap forward. And Gucci is poised to make that big leap shortly.

“The naysayers are wrong to suggest this is a systemic and entrenched failure of strategy,” believes Danny Younis, executive director of Sydney, Australia-based Automic Group and formerly with Shaw and Company.

He admits that many of Gucci’s problems have been self-inflicted – “Too much short-termism” – that have been compounded by broader structural industry-wide issues that are challenging many luxury brands. “Gucci’s exponential and stellar pace of growth was clearly unsustainable,” he said, noting that sales have accelerated 3X since 2012.

“Luxury’s trajectory is never flawless and just about every brand has faced significant challenges. Gucci is no different, but it’s not dire,” he continued.

“The desire for – and emotion of – the brand has deteriorated but can be restored within two years or less. Remember Gucci remains one of the few €10 billion turnover brands out there.”

Greenshoots​

Part of Gucci’s step back is to retrench around what made Gucci great in the first place: it’s Italian leather goods expertise. Ironically, it started to step away from that back in Gucci’s Tom Ford days when the shift from its luxury footing to being a fashion-first brand started.

“It moved from speaking about leather craftmanship – the pedigree Italians are known for– to being about fashion,” shared Philippe Mihailovich, founder of brand consultancy HauteLuxe and co-author of Haute ‘Luxury’ Branding.

“Everyone loved Tom Ford clothing and his design aesthetic. It became a big commercial success, but all of a sudden Gucci became the world of Tom Ford and Gucci became about his fashion,” he continued.

In the early days under previous creative director Alessandro Michelle, Mihailovich saw signs of a return to the brand’s Italian roots – “He brought a cultural reference to and reverence for the Italian Renaissance.” But then he seemed to get sidetracked by venturing too far into pop culture.

“Instead of the designer being the guide and interpreter for the world of the brand, the designer became almost bigger than the brand. It no longer looked like a serious luxury brand; it lost its essence,” he continued.

Enter Sabato De Sarno, who had been a luxury journeyman with Prada, Dolce & Gabbana and Valentino before stepping into the design director’s position at Gucci.

“I’m very excited about Sabato. He is into the details, knows about quality and understands a luxury brand is about timelessness. He has the ability to pull the brand back upwards again,” Mihailovich said.

De Sarno’s first collection is entitled Gucci Ancora, which means “Also now, also then.” It gives a taste of more Italianate elegant refinement to come and is resplendent in a deep Burgundy red color – perhaps the color of Barolo or Chianti is a more fitting description.

Gucci Ancora is just hitting the stores and been well received but represented only about 25% of revenue during the second quarter. CFO Armelle Poulou reported during the earnings call that the performance of “carryover” merchandise, especially handbags, pulled Gucci results down.

But that should be overcome as the year advances with the introduction of four new handbag collections starting in September. “We are working on the interaction between newness and iconic lines, optimizing pricing and availability and making sure quality is flawless,” she said.

The collections will cover both elevated true-luxury price points and so-called aspirational, entry-level prices. The company recognizes the importance of giving new customers an on-ramp to the Gucci brand so it is not abandoning lower-end price levels, but may still elevate them slightly to drive the aspirational dream for the brand.

Operationally, the brand is moving to enhance distribution, improve time-to-market and sell-through. In addition, tighter cost controls have been put in place and various planned store projects are being reassessed and canceled or postponed if not deemed “immediately essential.”

Managing For Long-Term Sustainable Growth​

In a weird way, becoming too popular can be the kiss of death for a luxury brand. That may be partly to blame for Gucci's recent fall from grace, as was Kering’s over-reliance on Gucci and its star creative directors to bring in sales and profits. LVMH doesn’t let that happen under its more diversified organizational structure.

So a sign of health might be that while Kering still depends on Gucci to carry more than its fair load, its contribution to sales and profits is now more balanced than in 2019 when Gucci contributed 63% of revenues and 83% of profits. This may give other Kering brands an opportunity to shine, like Yves Saint Laurent, Bottega Veneta, Balenciaga and Alexander McQueen.

“We are not going to compromise the long-term for short-term easy cuts,” Poulou said in the earnings call. “Our priority is to rekindle healthy revenue growth and the operative word here is ‘healthy.’”
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