How Fast Is Gucci Growing?

THE CHEAT SHEET

Gucci Enters a New Phase

Gucci Spring/ Summer 2020 | Source: INDIGITAL.TV

Kering, Moncler and Hermès report quarterly results on Oct. 24
Gucci's pace of growth has slowed markedly this year, and sales dropped in the US in the second quarter following the "blackface" balaclava controversy
In the first half of the year, Gucci represented about 60 percent of Kering's revenue

Kering's star brand officially came back to earth last quarter after two years of eye-popping growth. The question is where Gucci heads next, now that it's behaving like a normal, if still highly successful brand. A few factors point to a bright future: Alessandro Michele’s latest show demonstrated an aesthetic pivot that garnered favourable reviews; the brand's crack team of merchandisers will know what to do next. Gucci has also resumed blitzing American consumers with advertising after a brief lull following the blackface controversy. A foray into cosmetics appears to have paid off, with over 1 million tubes of lipstick sold in the line's first month. And the brand has certain items — the belt, for starters — that keep it front and centre with consumers. The biggest hurdle may be the high expectations set by Chief Executive Marco Bizzarri and Michele during their remarkable first few years with the brand; ordinary success can almost seem like a failure after that.

The Bottom Line: Watch how Kering's other major brands perform, particularly Bottega Veneta. With Gucci behaving more like a normal brand, Kering needs to show it's not a one-trick pony more than ever.

Nordstrom Joins the New York Department Store Fray

Nordstrom in New York City | Source: Courtesy Nordstrom in New York City | Source: Courtesy

Nordstrom opened a men's store in New York in 2018 | Source: Courtesy

Nordstrom opens a seven-storey, 320,000-square-foot location in Midtown Manhattan on Oct. 24, its first full-price women's store in New York City
The Seattle-based department store chain opened a men's store in the city last year and two "Nordstrom local" concept stores
Nordstrom's growing online sales are replacing weaker brick-and-mortar revenue

New York has seen unusual turnover in its department store scene. Lord & Taylor closed its flagship, Henri Bendel closed for good and Barneys may soon follow suit (see the next item for more on that). Saks gave its flagship a $250 million facelift and Neiman Marcus arrived in the city, anchoring the massive Hudson Yards mall. Next up is Nordstrom's huge new women's store. The Seattle chain is making a big bet on the future of brick and mortar, but its future may hinge on how well it integrates the online shopping experience. Nordstrom has been particularly aggressive about introducing digital brands to its shoppers and offering features such as online order pickups and returns. The "local" concept goes even further, as those spaces hold no inventory and even accept returns from rival retailers.

The Bottom Line: Nordstrom lacks the international name recognition to draw tourists away from Saks and Bergdorf Goodman. But offering a convenient, omnichannel experience might go a long way toward winning over the locals.

A Bidding War for Barneys

Barneys New York in lower Manhattan | Source: Getty Images

Barneys New York agreed last week to sell its assets to Authentic Brands Group for $271 million
Atrium founder and Kith investor Sam Ben-Avraham has assembled a rival bid backed by fashion and real-estate heavyweights
Bidding ends on Oct. 22. If ABG's offer wins out, it plans to close stores and liquidate merchandise

What’s the value of the Barneys brand? About $271 million, apparently. ABG’s plan to close Barneys’ remaining seven locations and reportedly relaunch as shop-in-shops inside Saks is an unexpected and, to those with fond memories of the department store’s heyday, tragic twist. On the plus side, the deal would liberate the retailer from its Madison Avenue lease that has crippled its ability to operate on its own, and ABG brands like Juicy Couture are thriving under the licensing model. Ben-Avraham's group, which includes Theory co-founder Andrew Rosen and billionaire investor Ron Burkle, would keep most stores open. He told BoF last week his plan would involve turning Barneys locations into entertainment destinations that appeal to shoppers and non-shoppers alike. What that would look like, and whether this model can reverse Barneys' decade-long slide, remains to be seen.

The Bottom Line: Along with the sale of Lord & Taylor to Le Tote for just $100 million, the fact that Barneys' brand might be its only asset is truly a sign of how far the once-mighty department store model has fallen.

SUNDAY READING

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The Week Ahead wants to hear from you! Send tips, suggestions, complaints and compliments to brian.baskin@businessoffashion.com.

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