Gucci is heading into the eighth year of its brand revamp efforts without any significant sales boosts to show for it. As noted by Reuters, Gucci’s parent company Kering “has picked a difficult time to bring in new management duo Marco Bizzarri and Alessandro Michele. Resuscitating the group’s most important brand could take longer than expected. The Italian label has been in turnaround mode since 2009, when former CEO Patrizio di Marco – who was ousted in December 2014 – said it had become overexposed. Gucci accounts for almost two-thirds of Kering’s overall recurring operating income.”
While critics are utterly taken with Michele’s touch and Bizarre has been praised for his ability to triple Bottega Veneta’s revenue to 1.1 billion euros during his five years in charge of the fellow Kering-owned brand, “that was a better time to be selling 2,000-euro handbags,” per Reuters.
“Like all luxury brands, Gucci is under pressure in Asia. It makes close to half its revenue in the region, including Japan. The label has a lot of stores in China – its website shows 62 addresses in the mainland, 11 in Hong Kong and five in Macau – where sales have been slowing dramatically. That is a problem now that Chinese shoppers are making 70 percent of their luxury purchases abroad.”
It will take several quarters of positive growth for investors to back Gucci’s turnaround. They may have to wait another year.