Gucci sets new revenue target – Footwear News

PARIS — Despite its recent underperformance compared to its peers, Kering has big ambitions for its star brand Gucci.

The Italian luxury brand is aiming for €15 billion in revenue, having hit its previously announced target of €10 billion in 2021, according to a document posted on Kering’s website at its Capital Markets event. Day in Paris on Thursday. He did not specify a timeframe for the next revenue milestone.

By comparison, Louis Vuitton, the world’s largest luxury brand owned by rival French conglomerate LVMH Moët Hennessy Louis Vuitton, generated revenues of 16.7 billion euros in 2021, according to HSBC analyst estimates. . LVMH does not detail the sales of individual fashion brands.

Gucci has grown exponentially since 2015, when Alessandro Michele took over as creative director and Marco Bizzarri as CEO. Its turnover was then 3.9 billion euros. These days, that nearly equates to the brand’s sales in the Americas alone, Kering noted.

But Gucci’s sales have been yo-yoing lately, rising 3.8% in the third quarter of 2021 and then jumping 31.6% in the fourth quarter. In the first quarter of 2022, revenue increased by 13.4% on a comparable basis, impacted by the COVID-19 related lockdowns in China.

Detailing its medium-term growth action plan, built around fashion and timeless products, Kering said it sees strong growth potential in the menswear and travel categories. Gucci plans to increase the share of leather goods in its sales mix, and to expand its Gen-Z clientele with aspirational categories, while strengthening the high-end offer to attract a mature clientele.

After achieving its goal of increasing sales density to 45,000 euros per square meter, Gucci is aiming for a further 30% increase, the document says. It plans to increase its store space through a 15% network expansion and store expansion, and has nearly completed the process of eliminating its wholesale network as part of a brand elevation strategy.

In a research note, RBC analysts Piral Dadhania and Richard Chamberlain said the €15 billion target implied a compound annual growth rate of 9% by 2027, “which we believe is achievable. in the context of Gucci’s brand elevation strategy, focused on leather goods and a rebalanced positioning between fashion and heritage.

Calling it the “right strategy”, they said Kering management attributed Gucci’s underperformance in China to the lack of a local manager, a situation that was resolved with the hiring of the former executive. of Tiffany & Co. Laurent Cathala as president of the Greater China fashion business. . It should be in place by the end of June.

In a separate presentation, Kering highlighted Saint Laurent’s potential to become a mega-brand, with a medium-term revenue target of 5 billion euros, double the 2.5 billion euros in recorded sales. last year. Kering has also said it is aiming for a turnover of 2 billion euros for its eyewear division, launched in 2015.

This story was reported by WWD and originally appeared on WWD.com.

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