Kering’s stellar results, released last week, show that Gucci’s strength has not waned, even as desirability wanes in some audiences. With sales up 31 percent year-on-year, Gucci is still the strongest horse in the Kering stable, accounting for 60 percent of sales and around 70 percent of profits. In its balance sheet, Kering stated that it is a key player in a fast-growing market that enjoys solid fundamentals and a balanced portfolio of complementary brands with great potential. That is certainly true. Although Kering lags behind LVMH, the company has emerged from the pandemic stronger and better known than it was in early 2020.
Houses Bottega Veneta, Balenciaga and Saint Laurent also posted double-digit growth, with the former showing no signs of slowing down despite the unexpected departure of its creative director Daniel Lee last November.
Less dependence on wholesalers
Kering reiterated that it is targeting like-space sales growth with less reliance on wholesale channels. By focusing on its own retail network and strategic partnerships where it does not have stores, it can direct distribution and exclusivity, have full control over pricing and can generate larger profit margins.
Since 2017, Gucci has drastically reduced its wholesale stores, and in its home market of Italy it reduced its multi-brand distribution from 110 to 38 stores in 2020. Kering takes cues from Gucci and follows a similar strategy for its other fashion houses.
“We are stopping online wholesale for our brands,” François-Henri Pinault, Kering’s chairman and chief executive officer, said in a conference call. The Group’s strategic priorities are clear. The sustained growth of homes and the end of online wholesale. Instead, she will focus on cross-business growth platforms in e-commerce, particularly e-concessions.
A relatively new online sales model, e-concessions are defined according to Glossy as brands selling their collections through a retail platform while retaining more control over pricing, marketing and product cataloging than they have with a traditional wholesale model.
Kering’s total sales rose 35 percent to €17.7 billion, up 13 percent from 2019. This puts Kering far ahead of the general luxury goods sector, which grew by four percent in 2019.
The stock market also reacted positively: The news of Kering’s results caused the share price to rise by up to 7.9 percent last Thursday.
This article was previously published on FashionUnited.uk. Translation and editing: Barbara Russ.