Work-in-Progress Gucci Weighs on Owner Kering

Sabato de Sarno’s Gucci debut didn’t offer the big bang the brand needed. There simply wasn’t enough to suggest that a fast and material re-acceleration at Gucci is likely.

A panel of experts debriefing on the show agreed on five key points: (1) Sabato De Sarno’s Gucci marks a welcome shift away from the aesthetic of former Gucci designer Alessandro Michele; (2) De Sarno presented a coherent project, avoiding the trap of trying to please everyone (unlike Riccardo Tisci at Burberry); (3) the shift to a “bon chic, bon genre” look makes the collection more commercial; but (4) there doesn’t appear to be enough originality to De Sarno’s vision to fuel a new Gucci dream; and (5) the move to a more classic, upmarket and timeless aesthetic pits Gucci against more credible incumbents, while the brand has historically proven to perform better when it’s over the top.

This doesn’t bode well for a rapid turnaround. And softening demand for luxury goods, as consumers sober up from the post-pandemic spending boom, only exacerbates the issue. We have seen multiple times that when consumers cut their discretionary spending, they also cut the number of labels on their shopping lists, concentrating their luxury budget on “must have” brands.

The bottom line: as things currently stand, the Gucci project seems half baked. François-Henri Pinault, CEO of parent company Kering, said himself it will take a few seasons before Gucci finds its footing. To be sure, there are some signs of momentum: Gucci was the top trending brand on fashion platform Lyst last week after a marketing push celebrating the 70th anniversary of the label’s horsebit loafers, which have been the subject of significant conversation on TikTok. But early response to De Sarno’s debut on social media in China, a make-or-break market where Gucci has struggled to recapture spend that was repatriated during the pandemic, wasn’t encouraging.

Other key labels at Kering are tracking poorly, too. Once high-performing Saint Laurent — whose CEO Francesca Bellettini was recently promoted to deputy CEO of Kering — produced only 7 percent growth in the second quarter. By contrast, Prada grew 2 times faster, LVMH’s fashion and leather goods unit grew three times faster, and Hermès grew four times faster. Elsewhere at Kering, brands like Balenciaga (which has suffered from scandal and consumer fatigue) and Alexander McQueen (where longtime creative director Sarah Burton has recently stepped down) have issues of their own.

A flurry of senior management changes at Kering only adds to the challenge. The departure of former Gucci CEO Marco Bizzarri — and several of the senior executives below him, including chief marketing officer Robert Triefus — is at the very least going to increase the amount of time the Gucci revival will take. Ditto the double-hatting of Francesca Bellettini, as CEO of Saint Laurent and deputy CEO of Kering. Indeed, the kind of rapid execution that characterised the spectacular Gucci turnaround we saw in 2016 seems firmly off the menu.

Luca Solca is head of luxury goods research at Bernstein.

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