Even during an industry-wide slowdown, Kering is lagging compared to other luxury players. Rival LVMH’s fashion and leather goods division reported a 1 per cent sales increase in the second quarter, while Richemont also reported sales up 1 per cent in the quarter ending 30 June. Burberry reported that retail sales tumbled 20 per cent year-on-year at constant exchange rates in the first quarter of 2024, and Hugo Boss reported sales down 1 per cent at constant exchange rates. The Moncler brand grew 5 per cent in Q2. Hermès and Prada are to report their numbers in the coming days.
Asked by an analyst if Kering would cut marketing costs and other expenses in order to protect the bottom line from free fall, Francesca Bellettini, deputy CEO in charge of brand development, replied: “We are not going to compromise the long term for the short term, easy shortcuts. We have the plan for all of the launches at Gucci, as in all of the other brands, and we have a portfolio of actions with clear KPIs that have to hit short, medium and long-term [goals]. And we will adapt the execution of our strategy depending on the return that we have, knowing that we are doing all of this in a challenging market situation.”
As Gucci is pursuing its turnaround strategy with creative director Sabato De Sarno, the management announced a line-up of new handbags starting from September. “The elevation strategy has to happen always with an eye on all of the consumer segments, high end and aspirational,” Bellettini noted. The new bags span price points and are tailored to markets and client segments, she added. “Each launch is going to be planned consistently with a communication strategy that speaks to the right consumer segment, a much more disciplined approach of communication tied very closely to the launch of the bags.”
On Balenciaga, which has hit a rough patch following its ad campaign scandal, Bellettini said: “The performance of Balenciaga is quite resilient. They have been doing very successful launches of new products like the Rodeo handbag or the relaunch of the City bag. They have very good traction with their VIC and loyal clientele. They are back to being perceived as the trend setter. The couture was one of the most-viewed shows of all time and the same success was reported for the show in Shanghai.”
“Our houses pursue their investments to enrich their offer, intensify the impact of their communications, and reinforce the exclusivity of their distribution. We make certain that every one of these investments creates value for the long term. While the current context might impact the pace of our execution, our determination and confidence are stronger than ever,” Pinault said.
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