BoF Logo

The Business of Fashion

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

Gucci Targets €6 Billion in Revenue, as Turnaround Gathers Pace

Marco Bizzarri's ambition to lift Gucci revenue to €6 billion is on track, with revenue on course to top €4 billion for the first time this year.
Gucci's Montenapoleone store | Photo: Ronan Gallagher
  • Bloomberg

Milan, ItalyGucci is on course to top €4 billion ($4.5 billion) in revenue for the first time this year as the Italian luxury brand's revival gathers speed under its new leadership duo.

Sales of items designed by new creative director Alessandro Michele have accelerated since March as more have reached shelves, chief executive officer Marco Bizzarri told reporters Thursday before a fashion show for Kering SA's largest brand in the cloisters of London's Westminster Abbey.

“We are particularly optimistic and confident,” said the CEO, who took over 18 months ago. “Just go and visit the shops. It is the only brand that has people in the shops.”

Bizzarri's bullishness contrasts with the sorry state of luxury spending. Sales of expensive handbags and other goods have slowed as China's economy cools and as terror attacks weigh on the feel-good factor that drives purchasing. The sector will expand at best 2 percent this year, the second weakest rate since 2009, Bain & Co. estimates.

“Today, if you want to grow you need to steal market share,” said Bizzarri. “The only way is through creativity.”

Red Leather

So far, Michele has demonstrated that, winning favourable press coverage and industry accolades. Yet his collections featuring red leather skirts and sheer pussy-bow blouses have only been available in boutiques since the third quarter; Gucci is still clearing out his predecessor’s merchandise.

“For nine months we were just talking,” said Bizzarri — something that tested investor patience given that Gucci accounts for more than half of Kering’s operating income.

Since then, the CEO’s efforts to reorganise management, cut the number of products by 30 percent and change everything from packaging to store design are paying off, he said. Sales of Michele’s women’s ready-to-wear have surged 66 percent this year, while his shoes for women are up 46 percent and new handbag sales are up 7 percent, led by designs such as the $2,250 Dionysus.

Long-term Ambition

Michele’s collections now account for about 70 percent of sales and the full complement of his designs will be in stores by early 2017, said the CEO, whose long-term ambition is to lift Gucci revenue to €6 billion, according to an investor presentation published Friday. Sales of Gucci items at other retailers — so-called wholesale revenue — are positive for a third straight quarter, the CEO said.

Markdowns on old stock will continue to weigh on growth this year, Bizzarri told reporters. Excluding their impact, “there is no doubt we will outperform the market,” he said.

Bizzarri also plans to refurbish fewer stores, targeting around 50 this year, from a previous goal of about 60. Cosmetic changes such as marble tables displaying rings, headbands and sunglasses alongside new bags in some boutiques have had a similar uplift on sales at a lower costs, he said, declining to quantify the increase.

“I don’t think the transition needs to wait for all the shops to be refurbished,” Bizzarri said, referring to previous comments he made that it could take as long as four years to refit all of Gucci’s 522 stores. “In terms of business, I think that we will have the full impact at the end of 2017.”

By: Andrew Roberts.

© 2023 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.

Farfetch’s chief executive José Neves is reportedly conferring with top shareholders, including Richemont and Alibaba, and JP Morgan about delisting the company, The Telegraph reported on Tuesday. A take-private deal could happen imminently as Farfetch’s stock remains under pressure, according to the report. The e-tailer’s share price has plummeted more than 80 percent since its 2018 IPO.

At The Business of Fashion’s VOICES 2023 gathering, Chanel’s global CEO Leena Nair outlined to BoF founder Imran Amed the vision she’s crafted during her first two years leading the iconic brand.

Across its 53-year history, international art fair Art Basel has been quick to innovate, catering to a rapidly developing art market and its customers. Today, it is utilising its expertise to help fashion and luxury do the same.

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.
Voices 2023 Live
© 2023 The Business of Fashion. All rights reserved. For more information read our Terms & Conditions, Privacy Policy, Cookie Policy and Accessibility Statement.
Voices 2023 Live