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Gucci and Balenciaga dominated the conversation at Kering’s press conference on Wednesday, which the conglomerate hosted at its headquarters in Paris following its fourth-quarter earnings results. At Gucci, sales dropped 14 per cent to €2.73 billion. Balenciaga, meanwhile, had a very challenging December following the brand’s controversy at the end of last year.
“We are not at all in a transition year,” Kering chairman and CEO François-Henri Pinault told reporters of Gucci, which announced new creative director Sabato De Sarno in January. His first show will be in September, with his first collection hitting stores in early 2024. In the meantime, Pinault pointed to the upcoming women’s show in Milan in February, which, like the January men’s show, will be designed by the brand’s creative studio. A cruise show in Seoul in May and another men’s show in June are also coming up. “We are not slowing down,” Pinault said. “Quite the opposite: 2023 is the year when Gucci comes back to fashion weeks.”
The return to the fashion calendar is part of the Gucci strategy unveiled during Kering’s Capital Markets Day last June. In 2022, Gucci generated €10.5 billion, while the mid-term objective shared with analysts last June is €15 billion in annual sales. Overall, Kering sales fell 7 per cent on a comparable basis to €5.4 billion during the fourth quarter, and the conglomerate reported “mixed performances across houses and regions”. Archrival LVMH’s fashion and leather goods division, which includes Louis Vuitton, reported sales up 10 per cent in the same period.
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Gucci is also pursuing its “elevation” strategy with the rollout of Gucci Salons, which are permanent spaces in either standalone locations or within Gucci flagships dedicated to very high-end offerings (think semi-couture dresses and custom-made pieces of luggage and high jewellery, with prices ranging from €40,000 to €3 million). The first standalone Gucci Salon is set to open on Melrose Avenue in April.
Among other components of the strategy is Gucci Cosmos, an exhibition which will open in April in Shanghai before travelling to major cities. “It’s an extremely sophisticated way to present the Gucci heritage that is not that well-known,” said Pinault. “It’s part of the events that accompany the move upmarket of Gucci and will contribute to change the image of the house.”
Regarding Balenciaga, group managing director Jean François Palus told analysts: “The impact of the regrettable controversy is now fading away, but of course, is still affecting trading right now. We think that this should be over in the course of Q2. We conducted two surveys, one internally and one externally. We came to the conclusion that there was no fault from anyone but just errors of judgment because procedures were adequately followed.”
He noted that the image department at Balenciaga has been reshuffled. An image board will now overview all content. It has also changed its external agency to also supervise the control over marketing level. “At the group level, we brought in additional guidelines on some topics, and we are considering the creation of a position in charge of brand safety in order to supervise this work,” Palus added.
Pinault said: “I got the question: why have heads not rolled? There’s a right to make mistakes in a group like Kering.”
After the brand went silent in December and January, it resumed campaigns at the end of January, and Demna gave his first interview on the matter to Vogue, which Pinault referred to as “the restart point” (Vogue and Vogue Business share a parent company, Condé Nast). “From the [Autumn/Winter 2023] show on, we [will] resume a normal pace of expression of the house,” Pinault told reporters.
Earlier this month, Kering announced the creation of a beauty entity in charge of developing the category, notably for Balenciaga, Alexander McQueen and Bottega Veneta. “We’ll start with fragrances,” Pinault said. On whether the group plans to repatriate the Gucci beauty license, which is currently owned by Coty, Pinault said: “I can't comment for legal reasons. We haven’t renewed the licenses of Balenciaga, Alexander McQueen and Bottega Veneta after they ended in the strategic perspective of creating our platform. It’s a rule that we’ll apply in the future.” The group is also eyeing acquisitions in beauty, providing “they bring expertises” allowing “to accelerate the development of the platform”.
Kering CFO Jean-Marc Duplaix also confirmed the acquisition of the building at the corner of rue de Castiglione and rue Saint Honoré that houses the Castiglione restaurant. According to press reports, it will be turned into a Gucci flagship adjacent to the new Gucci store dedicated to luggage. The building faces the Louis Vuitton Vendôme flagship. “There’s no confrontation here, no desire to do anything. It’s just that it’s a market where there’s competition, and from time to time, we are positioning on the properties that we think are useful for our brands,” Duplaix said.
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