Gucci and all the Kering house need a strong story to Tell in the future not a story about celebrities but a story about real customers and how they can relate to them and bring them a fantasy world with luxury products it's going to be hard to do though
Kering shares fell 8% a few weeks ago after the French fashion house said it expects to see its profits drop by up to 45% in the first half of 2024 driven by a decline in revenue from its top money maker, Gucci. The Parisian company, which owns fashion brands including Yves Saint Laurent and Balenciaga, said its "performance worsened considerably in the first quarter" due to "sluggish market conditions" which saw Gucci sales fall 21%. Kering (FR:KER) shares, listed on the Euronext Paris stock exchange, fell 8% on Wednesday having lost 44% of their value over the previous 12 months following a slump in its profits caused by a slowdown in the luxury sector. The French company, which was started as a timber trading company in Brittany in 1962 before transforming itself into a luxury goods seller in the 1990s, said it now expects its first half operating profit to drop between 40% and 45%, as it pushes ahead with plans to rejuvenate its business. Analysts polled by Visible Alpha had expected a first-half operating profit drop of 29%. Analysts from Stifel, led by Rogerio Fujimori, blamed a poor performance at Gucci for the slump in first quarter sales, as they said the Italian brand had failed to find a niche, particularly in Asia, as it is "not perceived as high-end enough or entry-price luxury." In a call with investors, Kering's director of financial communications, Claire Voinnesson-Roblet, said the macroeconomic environment in China had created a situation in which Gucci products are not attractive to either wealthy customers or aspirational looking for "affordable products." She noted certain high-end customers are looking for luxury goods as investments that will accrue in value. Gucci's sales fell 21% worldwide, to EUR2.1 billion in the first quarter of 2024, driven by a 28% slump in the Asia-Pacific, as buyers turned their backs on the brand, leading to a 19% drop in sales to individual customers via its retail segment which accounts for 90% of Gucci's revenue. "The issue was really Gucci, which significantly underperformed the other brands in retail not only in Asia Pacific but also in Western Europe, North America and Japan," Stifel's analysts said, arguing investors should wait to see "green shoots" before buying shares in Kering.
Just watched another commentary from Tuba Avalon and she hit it on the head- Gucci is not trying to do fashion anymore. They are focusing on bags and shoes and don’t expect to sell much ready to wear (aside from jeans… maybe). They are intentionally making clothes that are well-made but basic so that the clothes don’t steal the spotlight from their real products.
Thats so interesting tho, because I wonder if that change is inspired by getting back to heritage in a sense or if they feel for them its the clearest path to do LV numbers
Sabato stuff isn't selling. It's been in my local Gucci boutique since late Jan. Chinese here find it boring and say no reason to buy it since the designs are too simple and it looks like other brands. Alessandro stuff was more special and can tell Gucci right away.
Thank you for putting Gucci's performance in the proper context!!! It is ridiculous to make Sabato the scapegoat during 1st quarter when his product just started to hit the stores at the beginning of March. I think they are in the right direction. I do think he needs at least 3 NEW it bags and shoes. I liked that new smaller bag in the latest cruise collection. I did not like that oversized bag but it might be a hit because people liked that enormous bag from YSL. We shall see..
I think I can explain why people believe Balenciaga makes more than Gucci. In my city, there are so many fake Balenciaga tshirts and shoes that it feels like every second person has a Balenciaga product. Now that you said their profit is so small, I understand they are actually fake. (I did not get to touch any of those products to be able to verify for myself)
Scapegoating the artistic director has been a key part of sustaining long term growth for most conglomerate-owned luxury houses. It’s a sad but crucial part of the strategy for many of them. Consumers dont turn their back on a house, they turn their back on the director and return with a new found enthusiasm when the next guy comes along. Why else would the CD be the only public/media facing employee? Most of the brands make the bulk of their money through verticals which the CD has no say on such as beauty and fragrance… but somehow if those areas falter and the profits dip, the CD takes the heat. This is not by accident.
I think the luxury market is going to take a hit for some time not just Gucci but multiple houses too many changing of designers and no real flow of designer to customer ratio too much changing of the guard. Also things are just too expensive and the American middle class is not doing very well in the United States of America. lower middle class is now $80,000 a year! Which is the target Gucci audience
Wider range of products that also sell well. For example, there are many Gucci fragrances & cosmetics that sell really well. The Balenciaga cosmetics division is close to non existent so there’s a huge disparity there. Gucci also sells better than Balenciaga in every category (ready to wear, accessories, footwear, homeware etc)
@@FashionRoadman I figured. Because I just visited Balenci a couple days ago and thought about how they alienate themselves to certain categories of the average luxury customer. The avant designs might scare off people in the long run. Gucci seems to have a bigger net.
They need a heavy design reconstruction which is what they're doing this new Gucci like it or not is the Right Way Forward. they have too many people into the fold too many different types of customers and now the brand doesn't look as luxurious as it once did. But with this new designer like it or not it's a step in the right direction. But it's going to take some time Balenciaga also needs a new step forward demma is boring now. His old little show tricks don't work anymore and if you don't have that what do you have nothing for people to buy into.
Balenciaga is S***. Sorry, just had to be honest and say it as it is. Demna started off in the right direction then he just focused on sportswear too much and by sticking the BALENCIAGA name on clothing, cheapened the brand. His couture gave me hope but now that seems to have gone. I actually think Kering need to look at who is making the decisions and do they have the right leadership team in place. These are the people making the decisions, not the designers. Someone decided to hire Sabato and Sean which I personally think was a mistake.
It does don’t worry, normally the companies post the official reports on their websites (they’re legally obligated to do so) - so you can find the Q1, Q2, Q3, Q4, H1 & H2 reports for each big conglomerate on their website.
Gucci and all the Kering house need a strong story to Tell in the future not a story about celebrities but a story about real customers and how they can relate to them and bring them a fantasy world with luxury products it's going to be hard to do though
Kering shares fell 8% a few weeks ago after the French fashion house said it expects to see its profits drop by up to 45% in the first half of 2024 driven by a decline in revenue from its top money maker, Gucci.
The Parisian company, which owns fashion brands including Yves Saint Laurent and Balenciaga, said its "performance worsened considerably in the first quarter" due to "sluggish market conditions" which saw Gucci sales fall 21%.
Kering (FR:KER) shares, listed on the Euronext Paris stock exchange, fell 8% on Wednesday having lost 44% of their value over the previous 12 months following a slump in its profits caused by a slowdown in the luxury sector.
The French company, which was started as a timber trading company in Brittany in 1962 before transforming itself into a luxury goods seller in the 1990s, said it now expects its first half operating profit to drop between 40% and 45%, as it pushes ahead with plans to rejuvenate its business.
Analysts polled by Visible Alpha had expected a first-half operating profit drop of 29%.
Analysts from Stifel, led by Rogerio Fujimori, blamed a poor performance at Gucci for the slump in first quarter sales, as they said the Italian brand had failed to find a niche, particularly in Asia, as it is "not perceived as high-end enough or entry-price luxury."
In a call with investors, Kering's director of financial communications, Claire Voinnesson-Roblet, said the macroeconomic environment in China had created a situation in which Gucci products are not attractive to either wealthy customers or aspirational looking for "affordable products." She noted certain high-end customers are looking for luxury goods as investments that will accrue in value.
Gucci's sales fell 21% worldwide, to EUR2.1 billion in the first quarter of 2024, driven by a 28% slump in the Asia-Pacific, as buyers turned their backs on the brand, leading to a 19% drop in sales to individual customers via its retail segment which accounts for 90% of Gucci's revenue.
"The issue was really Gucci, which significantly underperformed the other brands in retail not only in Asia Pacific but also in Western Europe, North America and Japan," Stifel's analysts said, arguing investors should wait to see "green shoots" before buying shares in Kering.
Just watched another commentary from Tuba Avalon and she hit it on the head- Gucci is not trying to do fashion anymore. They are focusing on bags and shoes and don’t expect to sell much ready to wear (aside from jeans… maybe). They are intentionally making clothes that are well-made but basic so that the clothes don’t steal the spotlight from their real products.
Thats so interesting tho, because I wonder if that change is inspired by getting back to heritage in a sense or if they feel for them its the clearest path to do LV numbers
Sabato stuff isn't selling. It's been in my local Gucci boutique since late Jan. Chinese here find it boring and say no reason to buy it since the designs are too simple and it looks like other brands. Alessandro stuff was more special and can tell Gucci right away.
Thank you for putting Gucci's performance in the proper context!!! It is ridiculous to make Sabato the scapegoat during 1st quarter when his product just started to hit the stores at the beginning of March. I think they are in the right direction. I do think he needs at least 3 NEW it bags and shoes. I liked that new smaller bag in the latest cruise collection. I did not like that oversized bag but it might be a hit because people liked that enormous bag from YSL. We shall see..
I think I can explain why people believe Balenciaga makes more than Gucci. In my city, there are so many fake Balenciaga tshirts and shoes that it feels like every second person has a Balenciaga product. Now that you said their profit is so small, I understand they are actually fake. (I did not get to touch any of those products to be able to verify for myself)
good perspective. it's just crazy how so many people think their anecdotal experience somehow equates to global reality.
Scapegoating the artistic director has been a key part of sustaining long term growth for most conglomerate-owned luxury houses. It’s a sad but crucial part of the strategy for many of them. Consumers dont turn their back on a house, they turn their back on the director and return with a new found enthusiasm when the next guy comes along. Why else would the CD be the only public/media facing employee? Most of the brands make the bulk of their money through verticals which the CD has no say on such as beauty and fragrance… but somehow if those areas falter and the profits dip, the CD takes the heat. This is not by accident.
I think the luxury market is going to take a hit for some time not just Gucci but multiple houses too many changing of designers and no real flow of designer to customer ratio too much changing of the guard. Also things are just too expensive and the American middle class is not doing very well in the United States of America. lower middle class is now $80,000 a year! Which is the target Gucci audience
Does Gucci make more than balenci because their collections are bigger? A wider range of products?
Wider range of products that also sell well. For example, there are many Gucci fragrances & cosmetics that sell really well. The Balenciaga cosmetics division is close to non existent so there’s a huge disparity there. Gucci also sells better than Balenciaga in every category (ready to wear, accessories, footwear, homeware etc)
@@FashionRoadman I figured. Because I just visited Balenci a couple days ago and thought about how they alienate themselves to certain categories of the average luxury customer. The avant designs might scare off people in the long run. Gucci seems to have a bigger net.
They need a heavy design reconstruction which is what they're doing this new Gucci like it or not is the Right Way Forward. they have too many people into the fold too many different types of customers and now the brand doesn't look as luxurious as it once did. But with this new designer like it or not it's a step in the right direction. But it's going to take some time Balenciaga also needs a new step forward demma is boring now. His old little show tricks don't work anymore and if you don't have that what do you have nothing for people to buy into.
I think now would be a good opportunity for the Gucci family to buy back the brand from Kering
I don't see that as being a realistic solution. Not that simple. Besides what would that change?
Balenciaga is S***. Sorry, just had to be honest and say it as it is. Demna started off in the right direction then he just focused on sportswear too much and by sticking the BALENCIAGA name on clothing, cheapened the brand. His couture gave me hope but now that seems to have gone. I actually think Kering need to look at who is making the decisions and do they have the right leadership team in place. These are the people making the decisions, not the designers. Someone decided to hire Sabato and Sean which I personally think was a mistake.
Gucci fell after getting Jack Grealish as ambassador
Gucci needs Tom Ford, again. Kering owns nearly 70% of Gucci. So they can't afford for the brand to flounder.
Hey @fashionroadman, where can I find fashion financial reports? A source where I can find the numbers rather than headlines
Hope this question makes sense
It does don’t worry, normally the companies post the official reports on their websites (they’re legally obligated to do so) - so you can find the Q1, Q2, Q3, Q4, H1 & H2 reports for each big conglomerate on their website.