(AOF) – Kering has announced the appointment of Sabato De Sarno as creative director of Gucci, where he will be responsible for relaunching the brand. Originally from Naples, he began his career at Prada in 2005, moved to Dolce & Gabbana, then joined Valentino in 2009. He held various positions there before becoming its fashion director and supervising this title the men’s and women’s collections. Sabato De Sarno will present his first collection for Gucci during Milan Women’s Fashion Week in September 2023, the luxury group said in a statement.
In his new role, Sabato De Sarno will lead Gucci’s design studio and will report to Marco Bizzarri, CEO of the Italian fashion and luxury house.
“He will be responsible for defining and expressing the creative vision of the house through the women’s, men’s, leather goods, accessories and lifestyle collections,” according to the Kering press release.
AOF – LEARN MORE
Key points
– Luxury group born in 1963, owner of the brands Bottega Veneta, Gucci and Yves-Saint-Laurent;
– Turnover of €17.6 billion achieved 44% in Asia-Pacific, 26% in North America and 23% in Europe%;
– Luxury “pure player” business model, based on growth exceeding that of the markets, on the creative autonomy of the Houses, the pooling of support functions and cross-functional expertise and the digital transformation at the service of distribution and client ;
– Capital controlled at 41.74% (58.44% of voting rights) by the Artemis holding company of the founding family, François-Henri Pinault being Chairman and Chief Executive Officer of the 13-member Board of Directors and Jean-François Palus Director deputy general;
– Healthy balance sheet, with net debt of €942m at the end of June compared to €13.7bn in shareholders’ equity and operating cash flow of more than €2bn.
Challenges
– “Empowering imagination” growth strategy aimed at increasing the quality of products and the foundation of brands and controlling distribution, via e-commerce and the continued network of stores, with a focus on three activities:
– YSL: doubling of turnover and operating margin of +33% before 2030,
– Gucci: revenues of €35 billion and operating margin of +41%,
– Eyewear: revenues of €2bn, vs €706m in 2021 and operating margin of +15%;
– Innovation strategy on 3 pillars:
– investment in companies with innovative business models, MIL laboratories for sustainable alternatives in jewelery and textiles, use of blockchain to counter counterfeiting, etc.;
– robustness of logistics infrastructures serving the customer experience: Luce application on product availability, virtual offer based on data, internalization of sites, etc.,
– growth in e-commerce (13% of sales);
– 2025 “Care for the planet” environmental strategy, reported in an environmental income statement:
– reduce the group’s CO2 emissions by 50%,
– work on the environmental impacts of the supply chain (CO2 emissions, water consumption, air and water pollution, waste production and land use),
– create a “Sustainable Development Index of suppliers” and raise the traceability of animal welfare and the use of chemical products,
– promote “sustainable design”,
– create a Materials Innovation Lab (MIL) dedicated to Watches and Jewelry after that of fabrics and textiles,
– complete the compensation of CO2 emissions) for biodiversity;
– Diversification into eyewear with the purchase of the American Maui Jim.
Challenges
– Strong dependence on Gucci, 1st contributor to revenues and most profitable brand;
– Acceleration of growth and profitability of YSL and Bottega Venetta and recovery of sales of Gucci, handicapped in the 3rd quarter by the sluggishness in China and the United States;
– After a 23% gain in revenues at the end of September, anticipation of further growth in sales and turnover in 2022;
– Continuation of share buybacks until the end of the year.
Find out more about the specialized distribution sector
Concerns remain
According to the Federation of Specialized Trade, Procos, in October 2022, activity fell by 1.5% over one year. Nevertheless, the beauty and health (+ 5.2%) and specialized food (+ 3.5%) activity is dynamic compared to October 2021. The frequentation of the points of sale was very impacted by the problems of fuel and bad weather. Compared to October 2019, the pre-covid year, the drop in attendance is very sharp (-20.9% in October). Shopping centers and the outskirts are more impacted than city centers with a difference of four to five points.
Several reasons for concern exist for the future. The players are experiencing a very significant scissor effect given the increase in their operating costs while the evolution of demand is very uncertain. Very few brands can pass on the increase in their costs to their selling prices. The federation therefore asks, among other things, to limit the indexation of the Commercial Rent Index to + 3.5% for the rents of all companies in 2023. It also invokes an absolute urgency: to cap the price of energy for 2023 and retroact on the contracts already signed to prevent the rate of failures from accelerating.