Skip to main content
BoF Logo

The Business of Fashion

Agenda-setting intelligence, analysis and advice for the global fashion community.

The State of Gucci

After years of blockbuster growth, Gucci is struggling to bounce back from the pandemic. Getting back on track will require the brand to appeal to multiple tribes of consumers.
Models pass by on a conveyor belt modeling Gucci's Spring/Summer 2020 collection. Getty.

Since 2015, Gucci has driven the most dramatic turnaround in the history of the modern luxury industry. Booming interest in designer Alessandro Michele’s inclusive, maximalist vision, fueled by a cutting-edge operation run by chief executive Marco Bizzarri, more than doubled annual sales to €9.6 billion (about $11.6 billion) at the end of 2019, as well as nearly quadrupling profits.

But while Gucci delivered a “soft landing” of slowing growth in the months leading up to the pandemic, the coronavirus crisis has since seen the brand’s trajectory change from gentle slowdown to steep decline. The French luxury group Kering, which owns Gucci, reported that the brand’s sales had continued to fall in the fourth quarter, dropping 10 percent year-on-year.

For the full year, Gucci’s sales fell 22 percent to €7.4 billion (about $8.9 billion). That decline is roughly in line with consultancy Bain & Company’s estimates for the global luxury industry overall, but far lower than that of other big and influential brands which rebounded more quickly from coronavirus lockdowns this spring.

Hermès returned to growth versus 2019 over the summer, as did LVMH’s fashion and leather goods division, powered by Louis Vuitton and Dior. In the fourth quarter, the LVMH fashion division accelerated to grow by as much as 18 percent year-on-year, nearly 30 percentage points more than Gucci.


Kering’s other brands are still growing, albeit more slowly than over the summer. Sales at Yves Saint Laurent rose a modest 0.5 percent in the fourth quarter, while Bottega Veneta grew 16 percent (slowing from 20 percent in the third quarter). Kering’s “Other Houses” division, which includes Balenciaga and Alexander McQueen, slowed to 2 percent growth from last quarter’s 12 percent jump.

But cash cow Gucci is by far the group’s greatest concern. Even after a rough 2020, Gucci still accounts for almost two-thirds of the group’s €15.8 billion (about $19 billion) in annual sales, as well as over 80 percent of profits.

Precisely how much of Gucci’s decline can be attributed to the pandemic and how much is linked to underlying weaknesses in the brand’s market positioning is difficult to untangle. But the widening gap with its peers suggests that Gucci faces challenges beyond the present crisis.

Gucci’s management has long acknowledged that slowing growth was inevitable after years of revenue explosion unprecedented among major luxury brands. Still, the scale of the decline has led to tough questions from market analysts and investors. Shares in Kering dropped 8 percent Wednesday morning.

“A normalisation was bound to happen, but this is more pronounced than expected,” said Thomas Chauvet, analyst at Citigroup. “The concern is about how long it’s going to take to open a new chapter.”

The pandemic has had an outsized impact on Gucci in part due to its heavy reliance on selling to tourists, particularly in its home European market. The flow of international visitors from China and other key regions like the Middle East is not expected to return to 2019 levels for many years due to travel restrictions and changing consumer behaviour, meaning that Gucci will need to grow its appeal with local customers to fill the gap.

Gucci’s underperformance was also exacerbated by a plan to reduce wholesale exposure during the year. At Gucci’s own retail stores, the single-digit decline in sales for the fourth quarter was “far from a disaster,” Chauvet points out, especially when you consider that many stores were closed during coronavirus lockdowns.

But the biggest challenge could be evolving the brand’s market positioning and aesthetic.


Starting in 2015, Gucci ignited the fashion market with its bold approach to merchandising. Whereas previous designer revamps sought innovation on the runway, but mostly favoured continuity and a conservative approach elsewhere, Gucci extended Michele’s vision — including sequins, animal motifs, logo prints, and graffiti — to practically every shoe, wallet, Instagram post, and store renovation.

The eye-catching jolts of fashion across price points made for easy selling to a new cohort of young, social media-savvy shoppers who were happy to line up to buy pool slides, sneakers and minibags during their travels. But the more mature and sophisticated clients that typically round out a luxury brand’s base may have been less convinced.

In a presentation for investors on Wednesday, Kering executives talked about how the brand planned to rebalance its focus this year: catering to wealthier clients with higher-end bags, watches, and jewellery, and attracting local clients to stores using hundreds of events to celebrate Gucci’s centennial year.

Devising more classic pieces for a more conservative clientele could be in step with the times. “The fashion-forward consumers want to try different brands — at least for a season or two,” London-based luxury consultant Mario Ortelli said. “But Covid-19 has focused the preferences of luxury consumers on ‘investment pieces,’ which are more in the DNA of heritage brands.”

Kering had already begun to prepare for some fatigue with Michele’s maximalist vision before the pandemic. The designer debuted a more streamlined offering on the runway as early as September 2019, and his recent collections have been titled “Epilogues,” positioning them as a postscript to the previous fashion cycle.

Where Gucci’s accessories had previously been adorned with strawberry motifs or hand-painted snakes and flowers, the brand’s biggest bag launches of last year included ultra-classic reissues: the “Jackie” shoulder tote popularised by Jacqueline Kennedy Onassis in the 1960s, and the Horsebit line of satchels dating from 1955.

“We’ve continued to invest in our projects and strategies since the crisis,” Kering chairman and chief executive François-Henri Pinault said. “We’re far from having fulfilled the potential for our brands to grow, and especially not for Gucci.”

At the same time as Gucci tests the waters of a more classic aesthetic, however, it has continued its existing approach of delivering a steady stream of attention-seeking novelty. Its current collaboration with the North Face has been a highly visible push to regain momentum with the streetwear set, who are more interested than ever in cross-pollination between fashion labels and outdoorsy brands. That collection is being sold alongside bags and sneakers emblazoned with images of Donald Duck — the fruit of another collaboration, with Disney.


“The new strategy is about being always ‘on’,” Pinault explained, with a focus on creating “much more excitement, much more of an emotional link between the brand and clients.”

If those initiatives seem to be pointing in different directions, that’s likely by design: Gucci is more than twice as big as it was before Michele took the helm, and restoring momentum will require that the brand continue to be a big tent that can unite multiple tribes of consumers.

With such a big business to support, Gucci’s next step probably won’t be as bold a bet as in 2015. “We know that a new chapter needs to be written, but it’s probably not a radical transformation,” Chauvet said.

Gucci is now “a powerful organisation with the ability to invest in all the elements that can make the success of a luxury brand,” Ortelli said. “The question is how much time they will need.”

Related Articles:

Is There a New Gucci Brewing?

Gucci to Launch on Tmall as Kering and Alibaba Reconcile On Counterfeit Claims

Gucci’s Q4 2020 Sales Fall 10 Percent, Missing Analyst Expectations

© 2024 The Business of Fashion. All rights reserved. For more information read our Terms & Conditions

More from Luxury
How rapid change is reshaping the tradition-soaked luxury sector in Europe and beyond.

Fashion Goes Big at Salone, But Design Still Rules

Fashion brands are edging in on the world’s largest gathering of design professionals and their wealthy clients, but design companies still dominate the sector, which is ripe for further consolidation, reports Imran Amed.

view more

Subscribe to the BoF Daily Digest

The essential daily round-up of fashion news, analysis, and breaking news alerts.

The Business of Fashion

Agenda-setting intelligence, analysis and advice for the global fashion community.
The Business of Beauty Global Awards - Deadline 30 April 2024
© 2024 The Business of Fashion. All rights reserved. For more information read our Terms & Conditions, Privacy Policy, Cookie Policy and Accessibility Statement.
The Business of Beauty Global Awards - Deadline 30 April 2024