Gucci's Exponential Growth Spurt Continues

Alessandro Michele's designs drove sales up another 49 percent last quarter.
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Gucci's Fall 2017 campaign. Photo: Glen Luchford/Gucci

Gucci's Fall 2017 campaign. Photo: Glen Luchford/Gucci

Gucci will be exiting 2017 a significantly bigger brand than when it entered. Following revenue increases of 48 and 39 percent over the first and second quarters of the year, respectively, its parent company Kering announced on Tuesday that (organic) sales grew a whopping 49 percent to €1.55 billion (roughly $1.82 billion) in the third quarter of fiscal 2017. The brand's growth was driven by sales in its own stores  — up 51 percent — and e-commerce, where sales grew in the triple digits (Kering didn't give a number). The Fall 2017 collection was also especially popular among buyers, apparently, resulting in a 43.9 percent increase in wholesale revenue.

That Gucci has reported another quarter of explosive growth is further proof that Alessandro Michele's design ethos is more sustainable than some may have thought. Gucci's relentless Gucciness is appealing to a "broader and increasingly diverse clientele segments, attesting to the development of a sustainable growth model," according to Kering. During a conference call with investors and analysts, the company emphasized Gucci's success in both menswear and womenswear, across all categories — from leather goods to footwear to ready-to-wear — and nationalities, from North America to Europe to Asia.

So, where does Gucci go from here? The company noted it would be making significant investments in marketing — a new celebrity face perhaps? (*cough* Harry Styles *cough*) Or a destination runway show? — and communications. It's also continuing to roll out its Michele-approved updated store formats and improving its supply chain. Early next year, it will open the "Gucci Art Lab," a new, state-of-the-art leather goods production facility.

As for Kering's other brands, Saint Laurent continued living up to its reputation as one of the conglomerate's rapidly growing stars (albeit one that has recently been outshined by Gucci) with sales up 22 percent on a comparable basis. Without going into specifics, the company also boasted of Balenciaga's "excellent performance." It also emphasized how much designer Demna Gvasalia's Spring 2018 show for the house "strengthened the appeal of the brand" and the "unanimous acclaim" from designer Anthony Vaccarello's Spring 2018 Saint Laurent show.

While all the illustrious houses with new(ish) creative directors are doing well, what about Kering's non-luxury company? While Puma saw a decent lift in comparable sales — 15.9 percent — it's been plagued by rumors that Kering is trying to offload it, which the company certainly didn't deny. During a call with investors, CFO Jean-Marc Duplaix noted that Puma is a "a non-core asset" and that Kering is "focusing more on luxury." Stay tuned for news on that.

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