Kering’s Gucci overtakes Hermes on Michele’s revamp

by BLOOMBERG

PARISGucci surged past rival Hermes in sales as shoppers snapped up more of designer Alessandro Michele’s crystaland sequin-coated creations over the holidays.

The Italian fashion label closed out the year with another quarter of runaway growth, with comparable sales rising 43%, parent Kering SA said in a statement yesterday. Its revenue of €6.2 billion (RM30.07 billion) last year surpassed the 5.5 billion posted by Hermes International.

Kering brands ranging from Saint Laurent to Balenciaga joined Gucci in reaping the fruit of youth-focused reboots. Millennial shoppers have been leading the luxury industry’s rebound, with customers under the age of 35 making up 85% of growth last year, according to consultancy Bain & Co.

“We are continually impressed by the momentum at Gucci,” wrote Hermine de Bentzmann, an analyst at Raymond James.

The Italian brand’s efforts under designer Michele and CEO Marco Bizzarri have seen Gucci roar back after years of sluggish sales. That’s pushed it past Hermes, a more staid label that’s ridden rising demand for its high-end handbags, into second place among fashion labels owned by listed companies. It now trails only Louis Vuitton, the LVMH-owned leather-goods brand that has sales of more than €9 billion, according to Exane BNP Paribas analyst Luca Solca.

“We have a new generation of designers who have a more global vision,” CFO Jean-Marc Duplaix said on a call with reporters. He says the creative chiefs worked on extending their aesthetic to everything from store decor to social media campaigns to events to offer clients an immersive experience.

Kering shares were down 1.5% early yesterday in Paris, though they’ve risen more than 60% over the last year.

Under Michele, Gucci has regained the swagger it displayed with designer Tom Ford in the 1990s, while reaching out to a new generation of luxury fans. It has attracted young shoppers through collaborations with Instagram poets and pop-up events where they could personalise their handbags with butterfly and flower motifs, as well as by extending Michele’s look to new categories like watches and ad campaigns for perfumes produced by licensee Coty.

“When I meet with designers I’m less interested in their ideas for products than in the creative universe they propose,” Kering CEO Francois-Henri Pinault said at an investor presentation.

Balenciaga continued to push logo hoodies and luxury sock sneakers while Saint Laurent splashed out on a Paris Fashion Week spectacle, strutting out thigh-high feather boots and sparkly warm-up jackets in a nighttime show framed by the Eiffel Tower.

Last month, Kering took a step toward fulfilling its aim of becoming a pure player in luxury fashion when it proposed spinning off a majority of shares in German sportswear brand Puma to its own investors. Duplaix said investors will get one Puma share for every 12 of Kering. — Bloomberg