With new creative director Sabato de Sarno and the arrival of Jean-François Palus at the helm, Kering wants to give Gucci a boost. The aim is to quickly get its flagship brand and main source of profits back on track, thanks to a new aesthetic vision supported at all levels of the company and the group. This was the roadmap laid out by François-Henri Pinault, CEO of the luxury group, on Thursday July 28 at a conference to present the half-year results, which were hit by Gucci’s poor performance.
Kering saw its net profit fall by 10% to €1.785 billion in the first six months of the year, while its sales totalled €10.13 billion, up 2% on the same period a year earlier.
Gucci, meanwhile, saw its sales decline by 1% to €5.12 billion (+1% organic growth), while its profit from recurring operations fell by 4% to €1.81 billion, with a margin of 35.3%, down 1.2 points on the first half of 2022. Gross operating profit (Ebitda) came to €2.17 billion (-2%).
The Group explains this decline by the high level of investment over the period to boost growth, with expenditure rising faster than revenues. In addition, the rationalisation of the Italian brand’s distribution, which began in 2020 and will be virtually complete by the end of 2022, has led to a significant reduction in the proportion of revenues generated by the wholesale network, notes the company, which is nevertheless still counting on its medium-term target of sales of 15 billion euros and an operating margin of 40%.
To turn the brand around, Kering has embarked on a vast reorganisation since the departure in November of its emblematic artistic director Alessandro Michele. The company has recruited Sabato de Sarno, a designer unknown to the general public, who until now has worked behind the scenes at some of the biggest fashion houses, notably Valentino. “My priority was to move forward and accelerate the design team and creative direction. Sabato de Sarno started in May, and has already visited key markets in China and the United States. He is working closely with the merchandising and communications teams to prepare for the show and its expansion,” said François-Henri Pinault during the conference call.
Jean-François Palus on a mission
Marco Bizzarri, who has headed Gucci since 2015 and has been the driving force behind its revival over the last ten years, will leave the group on September 23, just after the fashion show. He will be replaced by Jean-François Palus, Deputy CEO of Kering and one of François-Henri Pinault’s closest associates.
This change, dictated by the urgency of the situation, “has been thought out pragmatically and efficiently to ensure that the relaunch of Gucci’s aesthetic is very well orchestrated and effective from the outset,” says the group’s CEO. “I am confident that Jean-François will make the right decisions and I trust his judgement. He knows the Gucci organisation very well, both inside and out. He already knows all the managers. He ran the Group with me for many years. He will be operational immediately,” he continues.
The number 1 priority in the short term is “to restore the company’s performance dynamic for the future by relaunching its aesthetics”. This is why Kering’s CEO did not want to take on an external manager, who would have taken several months or even a year to familiarise himself with Gucci’s complexity. “I didn’t want another transition period. Now we’re going to get the brand back on track,” he says.
Jean-François Palus will be assisted in his mission by Francesca Bellettini, who has been promoted to deputy CEO of Kering, in charge of the development of the houses, while retaining her role as CEO of Yves Saint Laurent. “What is a priority for us is that the relaunch and amplification of the vision that Sabato De Sarno is going to bring to Gucci is immediately orchestrated by the organisation. Jean-François will tackle this priority by working with Francesca Bellettini to ensure that all the components and areas of expertise are immediately covered at Gucci,” explains François-Henri Pinault.
Future work on image
“This means that after the September show, we want to be sure to give the right visibility to the products before they arrive in shops in the first quarter of 2024. The key pieces will be strongly promoted in the key shops with the right image and the right campaign. Management and all the teams will be working to ensure that the new aesthetic has an immediate impact across all product categories and the entire offer, at all points of contact with customers, through points of sale, campaigns and events,” explains the CEO.
To return to growth, the Italian house needs to work on a new image and aesthetic. But there is no question of changing the entire organisation or strategy. The policy of elevating the brand, initiated in 2019, will continue, with an emphasis on exclusivity. Once the new dynamic has begun, Jean-François Palus will have to find the right profile to guide the brand. “The search will begin in October to find the right profile, whether or not it comes from the industry, and to be sure of finding the right person at the right time to guide the house for the next ten years. All options are open,” says François-Henri Pinault, who does not want to rush into anything.
“We have a very strong team in place. Jean-François will be responsible for relaunching growth and repositioning the brand in the coming months. He will be helped and supported by Francesca’s expertise. We needed a new vision. I see this as a new chapter for Gucci,” he concludes.
Source : FashionNetwork