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Kering Sees First 'Tangible' Results of Gucci Rebranding

And further proof that Hedi Slimane's sales will be a very difficult act to follow at Saint Laurent.
Photo: Imaxtree

Photo: Imaxtree

Gucci had an up-and-down 2015 as Alessandro Michele's rebranding made its way to customers' eyeballs, subconsciousness and stores. But finally in the last quarter of the year and the first quarter of 2016, comparable sales grew by 4.8 percent and 3.1 percent, respectively. And on Thursday, Kering reported Gucci's best sales growth so far: In the three months ending on June 30, comparable sales increased by 7 percent. Revenue in the first half of the year increased by 3.9 percent to €2 billion, about $2.2 billion. In a conference call, Chief Financial Officer Jean-Marc Duplaix described it as the first tangible results of Gucci's massive refresh under Michele's direction after quarters of positive signs. As Kering's biggest brand, that means good news all around for the luxury conglomerate. 

Gucci's design transformation is not yet fully complete: Currently, 70 percent of sales are actually due to new product (i.e. designed by Michele), and Duplaix expects that number to rise to 90 percent by the end of the year in Gucci's own stores. But the most transformed design categories — ready-to-wear and footwear — are the biggest growth drivers while full-priced handbags also saw double-digit growth. Western Europe drove most of the sales increase in the first half of 2016, accounting for 20 percent of the comparable revenue growth, while North American sales decreased by 2 percent. Wholesale orders also stood out, as the category grew by 15 percent. 

Over at Saint Laurent, sales were through the roof, as has been typical for Hedi Slimane's collections leading up to his departure in April. Comparable sales grew up 24.2 percent in the first half of the year, thanks to double-digit growth across all retail regions and in wholesale. It amounted to €548 million in revenue, about $607 million. 

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Meanwhile, things are still troublesome at Bottega Veneta, which is feeling the Asian tourism slowdown and saw leather goods sales suffer. Comparable revenue decreased in the first six months by 9.1 percent to €571 million, or $632 million. Kering says action plans are already in place, but it's too soon to see the impact of them on the bottom line. 

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