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Struggling Gucci announces departure of chief executive and creative director Struggling Gucci announces departure of chief executive and creative director
(about 20 hours later)
Gucci has announced the departure of its chief executive and creative director as the luxury brand struggles to arrest declining sales. The woman behind fashion megabrand Gucci has paid the price for the luxury label’s declining sales. The creative director, Frida Giannini, is to leave in February after the legendary Italian house’s winter 2015/16 runway shows.
Patrizio di Marco, boss of the Italian fashion house, and his partner Frida Giannini, Gucci’s creative director, are stepping down from their posts early next year. Di Marco will be replaced by Marco Bizzarri, the former head of Bottega Veneta who is the head of the luxury division at Gucci’s parent, Kering. A replacement for Giannini has yet to be announced. Patrizio di Marco the firm’s chief executive, and Giannini’s partner, will be shown the door before her – he is stepping down next month.
François-Henri Pinault, chairman and chief executive of Kering, said: “I truly enjoyed working with Patrizio over those years. The great performances achieved by the Gucci brand during his tenure stand as a testament to his success. His strategic vision, passion, dedication and charisma were key to bring Gucci where it is today.” The 93-year-old label, famous for loafers ranging from £400 to £1,390 a pair, has been battered by big changes in the market for luxury goods. There have been signs of “label fatigue”, with shoppers moving away from brash brands towards smaller, less famous names.
However, Gucci and other European luxury brands have been hit by the twin factors of a corruption clampdown in China, which has dented sales of expensive gifts, and a growing trend among western shoppers for lesser-known fashion brands. The emergence of luxury upstarts has triggered a string of catch-up deals, such as Kering’s acquisition of jewellery group Pomellato and the purchase by LVMH of a stake in Italian designer Marco di Vincenzo. While once Gucci’s interlocking Gs logo was regarded as a significant asset, buyers are now less attracted to such obvious bling. Two thirds of Gucci’s sales now come from goods without logos, compared with only 40% a couple of years ago.
Giannini’s reign at Gucci has been characterised by an uptown, polished aesthetic, the kind that directly courts the customer with the disposable income to pay Gucci prices. Her collections typically feature glamorous eveningwear, luxury materials like fur and satin and models with big hair, big shades and big accessories. Over eight years in the creative director role, Giannini has fought valiantly to exorcise the ghost of her predecessor and former boss, Tom Ford. Ford, who was made creative director in 1994, famously changed the fortunes of the ailing Italian house. Losing nearly £14m in 1993, by 1999 it was valued at more than £2.5bn, thanks to Ford’s sexy, seventies-infused look which chimed with the hedonistic mood of a nineties. The economic problems across Europe have hit sales, as has the slowdown in emerging markets in Asia. There are also signs that wealthy Russian tourists are spending less. At the same time a clampdown on corruption and conspicuous consumption in China – Gucci’s biggest market – has dented sales of expensive gifts, as has recent unrest in Hong Kong. Last year, Gucci reported its slowest sales growth since 2010.
Arguably, Giannini has been unable to do the same for this decade. She is well-regarded but, as a quieter personality, she has not achieved the superstar status that Ford gave the brand, and Gucci Milan shows are not season-defining events. The trend in luxury, with new territories including China, has seen brands finding a niche market and sticking with it. Gucci has perhaps floundered due to designs that try to please too many consumers at once, as the luxury market has grown across the world. While her jetset aesthetic will always be associated with upscale fashion, it feels a bit generic in a marketplace that has seen global success for Celine’s arty experimentalism or Saint Laurent’s rockn’roll muse. Recent Gucci collections have played with luxury archetypes - heiress bohemian, nautical, Park Avenue princess - but failed to nail the house’s colours to the mast. Gucci is part of the Kering group of luxury labels, controlled by the French multibillionaire Pinault family. The group’s other brands include St Laurent Paris, Bottega Veneta, Balenciaga, Stella McCartney, Alexander McQueen and Christopher Kane – but Gucci brings in half the group’s sales.
The first acknowledgement of a need to rejuvenate this classic luxury brand came in September. The spring/summer 2015 show was styled by Katie Grand, the British fashion editor known for her ability to make a brand relevant to the zeitgeist. Grand’s influence could be seen in models with pulled-back ponytails and the presence of Kate Moss in the front row. Today’s announcement suggests the next step. Kering will now look to appoint a designer who will develop a distinctly Gucci aesthetic - and its niche - once again. The problem for Di Marco and Giannini seems to have been that not all labels have been hit as hard by the tougher market conditions. While Gucci announced a near 2% decline in sales over the most recent three months, St Laurent Paris – previously known as Yves St Laurent – saw its sales rise by 28%. Rivals Louis Vuitton and Hermès have also outperformed Gucci.
Analysts and investors have warned that Gucci got rid of too many accessible items and on average, raised prices too much – a move that damaged Britain’s Mulberry. They have also criticised the lack of innovation, which affects the perception of the brand among consumers, and ultimately growth prospects. Giannini’s collections have typically featured glamorous evening wear, luxury materials such as fur and satin, and models with big hair, big shades and big accessories. She joined Gucci in 2002 from rival Fendi to take charge of the handbag business. Two years later she took over the womenswear business when Tom Ford – who had reinvented the Gucci brand in the 1990s – departed. She was promoted to creative director in 2006.
Gucci makes up half the revenues of the Kering group, which is controlled by France’s Pinault family, and it posted a 1.9% fall in sales to €851m (£673m) between July and the end of September. This was smaller than the previous quarter’s 2.4% drop but still missed analysts’ forecasts of a 0.5% decline. Ford, who took charge in 1994, completely turned around the fortunes of Gucci with his sexy, 1970s-infused look, but Giannini has been unable to do the same over the past decade. Although well regarded, she is a quieter personality and never achieved the superstar status that Ford gave the brand. Gucci’s Milan fashion shows are no longer season-defining events. Fashion watchers say Gucci has floundered because its designs try to please too many consumers at once.
. Gucci has earmarked China as a newest market for luxury consumers. The brand staged a show in Shanghai in 2012 to court local consumers and there are more than 50 Gucci stores across the country. However, as the Chinese consumer has become more familiar with European luxury brands, it is smaller brands and luxury houses with specialisms that have come out on top. Louis Vuitton and Hermes - both with the heritage of luxury luggage - have played this up with success. Gucci, by contrast, has been criticised for higher prices and a lack of a clear brand identity. Giannini seemed to acknowledge the brand needed an overhaul when the spring/summer 2015 show, held in September, was styled by Katie Grand, the edgy British fashion editor. Kering is now expected to appoint a designer who will give Gucci a distinct look again.
Last year, Gucci reported the slowest sales growth since 2010 in stark contrast to Kering’s other brands Bottega Veneta and Saint Laurent, which are thriving and are managed by Bizzarri as part of the Kering luxury division – which excludes Gucci. Analysts and investors have also warned that Gucci raised its prices too far and too fast – a move that has also damaged Britain’s Mulberry.
Wolff Ollins strategist Charlie Stott says there is a fine balance to be struck between attainability and aspiration, and global coverage and niche brands. The days of conspicuous consumption, or bling, are over. He adds: “How do you transition the brand? The market has matured in China. It was dead easy in the old days, but now it’s much more about creative craftsmanship.” Charlie Stott, strategist at Wolff Olins, said there was a balance to be struck between attainability and aspiration. The days of conspicuous consumption, he said, were over, meaning luxury labels needed a rethink: “The market has matured in China. It was dead easy in the old days, but now it’s much more about creative craftsmanship.”
Bizzarri joined Kering in 2005 as chief executive of the Stella McCartney brand and was appointed head of Bottega Veneta in January 2009. During his tenure, sales and profit at the fashion house “increased dramatically”, Kering said. He has led Kering’s luxury couture and leather goods division since April. Di Marco will be replaced by Marco Bizzarri, currently head of the Kering luxury division and a former boss of Bottega Veneta and Stella McCartney. A replacement for Giannini has yet to be announced.
Di Marco will leave Gucci at the start of January while Giannini stays on until the end of February, after unveiling her final womenswear collection for Gucci on 25 February. She joined Gucci in 2002 and became creative director four years later. She revamped Gucci stores and developed new product categories, and has been credited with the success of Gucci’s license business in perfume, beauty and eyewear. Finding the right designer to reinvent the Gucci label once again could take some time. It took British handbag maker Mulberry almost 18 months to find a new creative director – Johnny Coca joins from Céline and starts next July – after the departure of Emma Hill. “Getting good creatives is really hard,” said Stott.
The Italian luxury brand dates back to 1921, when Guccio Gucci, a porter at the Savoy hotel in London, took inspiration from the smart luggage he saw there to open his own leather goods store in his native Florence. The brand dates back to 1921, when Guccio Gucci, a porter at the Savoy hotel in London, took inspiration from the smart luggage he saw there to open his own leather goods store in his native Florence.
Having the right creative direction is absolutely key. It took British handbag maker Mulberry almost 18 months to find a new creative director – Johnny Coca who joins from Céline and starts next July – after the departure of Emma Hill. “Getting good creatives is really hard,” says Stott.