Business & Policy | Fashion Updates | luxury

Kering Faces Challenges in Reviving Gucci & Other Brands Amidst Luxury Market Shift

Published: February 12, 2024
Author: Fashion Value Chain

Kering SA, the parent company of luxury brands like Gucci, Balenciaga, and Yves Saint Laurent, is navigating a complex landscape as it seeks to rejuvenate its portfolio amidst changing consumer preferences in the luxury market.

The focus remains on revitalizing Gucci, which has seen a decline in sales following a shift away from its previous bold aesthetic under former creative director Alessandro Michele. The company is now banking on a sleeker design approach under new creative leadership, hoping to reignite interest in the brand.

However, the road to recovery is challenging, with Gucci’s recent sales figures showing a decline compared to competitors like LVMH and Hermes. To address this, Kering is investing in building a new team and enhancing the brand’s desirability through limited product availability and improvements to its leather goods range.

Despite initial positive feedback on the new Gucci collections, Kering anticipates moderate retail sales growth in the coming year, particularly in the first half. Operating profit is expected to decline by at least a mid-single digit percentage as the brand undergoes its transformation.

In addition to Gucci, Kering is also working on revitalizing other brands like Balenciaga and Yves Saint Laurent while integrating recently acquired businesses like Creed, a high-end perfume brand. However, the company’s ambitious agenda is met with skepticism from some analysts, given the challenges of repositioning brands in a competitive luxury market.

Although Kering’s shares have faced downward pressure in the past year, investors remain hopeful about the company’s potential for a turnaround. The success of Gucci’s previous revivals under Tom Ford and Alessandro Michele, coupled with Kering’s track record in combining creative talent with effective marketing, instills confidence in the company’s ability to adapt and thrive in the long term.

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