Gucci Chief to Offer a Design for Luxury in Volume
By HEATHER TIMMONS
NYT
Published: December 10, 2004
reat Britain"/>LONDON, Dec. 9 - Robert Polet spent much of his career in business selling mass market products, most recently frozen peas and Popsicles. Now, after a high-fashion makeover, he is about to find out if he can interest the public in $1,000 handbags.
Next Tuesday, both the fashion industry, where skepticism about outsiders runs rampant, and corporate investors, with their focus on the bottom line, will be watching intently as Mr. Polet, the new chief executive of the Gucci Group, explains his strategy for the first time since joining the company in July.
He has an ambitious target to announce, executives with knowledge of the plans said. Mr. Polet wants to double the sales of Gucci's own brand-name merchandise in the next seven years.
That is just the kind of goal that used to excite investors when Mr. Polet ran Unilever's global ice cream and frozen foods division - with brands like Good Humor bars and Birds Eye vegetables.
But will the talents that worked so well at Unilever for Mr. Polet, 49, carry over into transforming a fractious, often money-losing group of luxury brands where talent has been streaming out the door into a profit-generating machine for Pinault-Printemps-Redoute, its parent company?
There has been speculation in the fashion industry that Gucci will try to expand its presence by signing more licensing deals and moving to make its goods more affordable. But executives with knowledge of Mr. Polet's plans said he had no intention of aiming Gucci and its other luxury brands at a mass audience.
Mr. Polet is also expected to announce that instead of selling any of Gucci's money-losing brands, at least for now, he will focus on trying to turn them around. These include Stella McCartney, Alexander McQueen and especially, Yves Saint Laurent.
Fixing the unprofitable divisions is certain to be one of Mr. Polet's biggest problems. Except for Gucci, the rest of the company's 10 brands are losing money. The problem with trying to sell them, analysts said, is that most might not fetch more than they cost. And putting a French icon like Yves Saint Laurent on the block would probably raise such hackles that Pinault-Printemps is unlikely to try.
Mr. Polet turned down a request to be interviewed for this article. A Gucci spokesman would not comment on what Mr. Polet intends to disclose at his debut next week, to be held at the British Museum before a crowd of analysts, investors and journalists expected to number in the hundreds.
Since taking over from Domenico De Sole - who combined business savvy with the inspired designs of Tom Ford to rescue Gucci from near-bankruptcy in the 1990's - Mr. Polet has kept a low profile, concentrating on meeting with employees and building a business plan.
Doubling sales of the Gucci brand on Mr. Polet's timetable would be ambitious, considering past performance. Its sales last year were 1.5 billion euros, down from a peak of about 1.7 billion euros (now $2.27 billion) in 2001.
Yet some of that resulted from a decline over all in the sales of luxury goods worldwide rather than poor performance on the group's part. And Gucci brand sales rebounded in the first half of its fiscal year, February through July, up 14.1 percent from the period a year earlier.
Analysts say that Mr. Polet's goal may not be all that unrealistic. It translates into 10 percent growth a year, compounded. Even without opening new stores, strong luxury brands can be expected to grow about 7 percent annually in a healthy economic climate, the analysts say. And Gucci may well look to China as a market for new stores.
But the trick of balancing sales growth while preserving cachet is a seldom understood mystery of luxury sales, and even before Mr. Polet has spelled out his plan, it has its share of critics.
"There is a limit to any brand," a former Gucci executive said, "and doubling Gucci's business is impossible if you want to maintain the exclusivity and quality."
Some analysts say they would be just as happy with a conservative outlook. Gucci does not need to outperform its rival LVMH Moët Hennessy Louis Vuitton, said Fraser Ramzan of Lehman Brothers here. "You can't do everything at once," Mr. Ramzan said. "The priority has to be to secure the sales that they do have, and control expenses."
Interviews with nearly a dozen former and current Gucci Group executives about Mr. Polet's first five months on the job turned up one constant, given the turmoil he stepped into. From those still inside the company to those who left with little affection for Gucci, the phrase most often used to describe him is "incredibly likable."
James McArthur, the interim chief executive of Yves Saint Laurent and director of strategy and acquisitions for the Gucci Group, said Mr. Polet "has a big handshake, a big smile and a big sparkle in his eye."
Mr. Ford and Mr. De Sole "were great to work for, and I loved to work for them," Mr. McArthur added, but "the shareholders bought the business and there was a change of business model."
To fill Mr. Ford's shoes, the company promoted unknown designers at Gucci to design men's and women's wear. Retailers and fashion critics applauded the continuity of their first collections, shown in the summer and fall; the clothes will be in stores next year.
Executives of Pinault-Printemps-Redoute, based in Paris, say they are confident that Gucci is in capable hands. "He's a warm personality, and he creates empathy," said Serge Weinberg, chairman of Pinault-Printemps and a former French government official with a reputation as a tough deal maker. "It's a people business, and he understands people very fast," Mr. Weinberg added.
Longtime Gucci executives also say they are impressed. "He comes across as a strong manager, who is open and interested in learning and understanding the business," said Mark Lee, who became president of the Gucci division when its chief executive, Giacomo Santucci, left in October after he was not given the compensation package he asked for.
Mr. Polet has "walked into a complicated situation," said Mr. Lee, who was previously the president of Yves Saint Laurent.
Another question Mr. Polet may have to tackle has a pervasive quality: Is he really running the show at Gucci or will he just be Mr. Weinberg's puppet? The departure of Mr. Santucci was attributed to a clash with Mr. Weinberg.
Mr. Weinberg dismisses the question. "Gucci is very important," he said, "but it's just 15 percent of our business" at Pinault-Printemps-Redoute.
Mr. Polet "has the full authority" to run the luxury group, he said. If Gucci executives call looking for an opinion, "I always send the question back to Robert."
"He's always asking the good questions," Mr. Weinberg added, "like what are we looking for, what is the target and what is our ambition. He's been able to point out that the company and the people need to deliver results."
