Gucci’s profit hit by fashion for exclusivity
Thursday 31 July 2014
Kering’s plan to turn Gucci around as an ultra-luxury brand has hit first-half sales and profit at the designer.
Gucci’s second quarter sales fell 2.4 per cent and first-half reported operating profit fell 5.1 per cent, hit by weaker wholesale numbers as its Paris-based owner cut the number of accounts that sell the label. Kering was concerned that its Gucci brand had become ubiquitous and it instigated a turnaround by increasing prices and limiting where it is sold.
Rahul Sharma, an analyst at Neev Capital, said: “Gucci is the latest reflection of how consumers are turning up their noses at mainstream luxe brands such as Louis Vuitton and Prada.”
But he added: “Newer powerhouses, Bottega Veneta and Saint Laurent picked up the baton from Gucci.”
Kering’s first-half results were in line with analyst expectations, with sales up 1.5 per cent on a reported basis to €4.7bn (£3.7bn) and sales at its luxury arm up 6 per cent – helped by the success of Bottega Veneta and Saint Laurent. Overall second-quarter sales came in at €2.35bn.
Kering's operating profit reached €810m, down 3.9 per cent on a reported basis as it was hit by currency changes.
The French luxury giant, run by chairman and chief executive François-Henri Pinault, said Gucci will return to growth in the second half as its new strategy begins to pay off. He also announced the purchase of Swiss watch maker Ulysse Nardin.
Mr Sharma added: “The land grab for bling-tastic watch brands by luxury conglomerates goes on… Ulysse Nardin -think ultra-shiny, huge watches.”
Claire Adler, a luxury jewellery and watch consultant, added: “Ulysse Nardin has a reputation for daring, ambitious, experimental watches that are not for the fainthearted. It is a good time for giant luxury conglomerates to go shopping - luxury watches and jewellery globally are growing at a faster rate than other luxury categories.”
The groups’ sports and lifestyle division, which includes the Puma brand, showed signs of improvement and Mr Pinault said: “In an unsettled operating environment, we are pursuing the implementation of our strategy, all the while keeping tight control over costs and safeguarding our gross margins.”
- 1 Revolutionary lost Caravaggio painting 'Mary Magdalen in Ecstasy' identified
- 2 McKamey Manor: This 'extreme' haunted house is the stuff of nightmares
- 3 Russell Brand says he will 'probably' give up acting to focus on his revolution
- 4 Watch what happened when food critics were unknowingly served McDonald's
- 5 David Beckham's Haig Club whisky is exactly what’s wrong with the Highlands
Renee Zellweger on plastic surgery rumours: 'I'm living a more fulfilling life and I'm thrilled that perhaps it shows'
Eleven members of same family hospitalised after eating deadly pufferfish
FCKH8: YouTube reinstates provocative anti-sexism video showing young girls swearing
Phone-hacking: The Piers Morgan connection - Mirror admits some stories during Morgan's tenure may have been obtained by illegal means
Russell Brand says he will 'probably' give up acting to focus on his revolution
Of course, teenage girls need role models – but not like beauty vlogger Zoella
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Support for EU membership 'at highest level since 1991' with most Brits wanting to stay 'in'
Thousands with degenerative conditions classified as 'fit to work in future' – despite no possibility of improvement
Attacks on 'Ukip Calypso' show how skewed people’s priorities are
Poppy Appeal 2014: This is why I won't be wearing a red poppy this year
iJobs Money & Business
£60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...
£30000 - £35000 Per Annum plus excellent benefits: Clearwater People Solutions...
£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...
£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...