Kering, which has a portfolio of luxury brands, said on Tuesday that its smaller labels, Bottega Veneta and Saint Laurent, are boosting income despite struggles from larger brands such as Gucci.
Although the latter label is adjusting to a restructuring and Kering’s operating profits are down 5% on last year, the conglomerate reported that revenue at Saint Laurent had doubled in three years, under the creative leadership of Hedi Slimane. While the French fashion house has had difficulties in previous years, it’s now beginning to make significant contributions to group profit.
For 2015, the group stated that the currencies of the changes could have a favourable impact on sales although operating margins could be affected in the first half due to the cost of its currency hedges.
The update from Kering comes alongside a decline in conscious consumerism, as traditional customers favour high-end labels that are less ubiquitous than luxury lifestyle giants such as Gucci.
Kering states that the renaissance of Gucci under new creative stewardship will be a priority in 2015, as the Italian label continued to see its comparable sales decline in the fourth quarter by 0.5%
Gucci’s best performance was in the handbag category, but going forward, there will be a focus on quality of service in Gucci stores as well as a greater emphasis on its ready-to-wear collections. Gucci posted a 6.7% drop in 2014 operating profit to E1.05 bn, which makes up over 60% of the group total.
In December, Kering replaced Gucci’s creative and management chiefs after more than two years’ of stagnant sales, most notably in Asia.
Kering’s Finance Director Jean-Marc Duplaix also chose to comment on the rumour that Italian footwear label Sergio Rossi, which the group acquired 70% of n 1999, is for sale. Duplaix remained vague but said on yesterday that “all options are being examined regarding Sergio Rossi assets”.
In July 2014, Duplaix told investors, rather ambiguously, that Sergio Rossi’s results were “not in line with expectations”. According to the grapevine, Sergio Rossi has been informally on the market for over two years but had never found buyers.
Paul Thomas, Retail Consultant at Retail Remedy, and formerly Harrods Retail Sales Director, is surprised by these rumours commenting that “although the brand is a little less conspicuous than the likes of Saint Laurent, it certainly exemplifies understated luxury. Perhaps the right buyer could drive the difference in perception, especially as the marketplace’s luxe customer is currently seeking toned down luxury, with a greater appreciation of craftsmanship.”