Gucci Lags Behind Rivals as Tourist Shoppers Stay Home -- 2nd Update
By Matthew Dalton
PARIS -- Gucci fell further behind its big competitors in the
fourth quarter, as the Italian fashion house stumbled without
tourist shoppers filling its boutiques during the pandemic.
Revenue at Gucci for the quarter totaled 2.3 billion euros,
equivalent to $2.8 billion and down 14% from a year earlier, parent
company Kering SA said Wednesday. For the entire year, revenue fell
23% to EUR7.4 billion.
The results mark a sharp turnaround for Gucci after years of
outperformance under Creative Director Alessandro Michele. In the
fourth quarter, Gucci lagged well behind the leading fashion brands
of LVMH Louis Vuitton Moet Hennessy SE: Louis Vuitton and Dior.
Those two brands reported surging revenue in the second half of
last year after the industry was allowed to reopen its boutiques
following lockdowns across the world in the first half of 2020.
Revenue at LVMH's fashion and leather-goods division -- which is
mostly Louis Vuitton and Dior -- rose 14% for the quarter.
Kering's shares closed down 7.15% on the earnings report.
"We expect market pressure to increase on Gucci to produce
efforts aimed at reinstating momentum," analysts at the brokerage
Bernstein said in a note.
The drop during the pandemic has exposed Gucci's heavy reliance
on tourist shoppers, particularly for stores in Europe that have
depended on Chinese clientele coming to the region. The brand is in
the midst of tweaking its image to burnish its appeal among
clientele older than 40, an effort partly directed at
Mr. Michele has lately toned down the baroque flourishes of his
earlier collections and removed sports logos that helped his
designs generate buzz on social media. More recently, Gucci has
released new handbag lines that emphasize the brand's historical
ties to Jackie O and Princess Diana.
Gucci is also investing in more-expensive product lines that
appeal to wealthier individuals, such as jewelry and high-end
"Precious skins of course will be developed significantly,
particularly at Gucci," said Francois-Henri Pinault, Kering's chief
executive and controlling shareholder.
Mr. Pinault said that a number of one-off factors hurt Gucci's
quarterly results. The brand pushed back the unveiling of its
cruise collection to late in the fourth quarter, as part of a new
schedule. That meant a dearth of new products for much of the
Gucci is also removing its products from wholesale stores in
favor of directly operated boutiques, dragging on sales.
"It's irrelevant to use Q4 to draw long term conclusions on
Gucci," Mr. Pinault said. "That would be so wrong."
Kering's other brands, which include Bottega Veneta, Saint
Laurent and Balenciaga, fared better than Gucci. Bottega Veneta has
engineered a rapid turnaround under designer Daniel Lee, becoming
one of the fastest-growing big brands in luxury. The Italian
leather goods brand boosted sales by 4% to EUR1.2 billion 2020,
despite the drag of the pandemic.
Kering's overall revenue fell 17.5% for the entire year to
EUR13.1 billion. Net profit fell 39% to EUR2 billion.
Write to Matthew Dalton at Matthew.Dalton@wsj.com
(END) Dow Jones Newswires
February 17, 2021 13:18 ET (18:18 GMT)
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