Gucci expects to grow more than twice as fast as luxury market

[PARIS] French luxury group Kering's flagship Gucci brand has seen strong sales growth since March and expects to be able to grow more than twice as fast as the wider luxury market over the medium term, the company said. "In March we saw very strong growth in products sold at their full price, including handbags, and this trend has increased in April and May," new Gucci chief executive Marco Bizarri told reporters in London on Thursday. His comments were embargoed for Friday.

Mr Bizarri, former head of handbag maker Bottega Veneta, was put in charge of Gucci in early 2015 and pushed through a style overhaul under designer Alessandro Michele, which has ended two years of falling sales.

Gucci believes that over the medium term its new image will allow it to grow more than twice as fast as the luxury market, which Bain & Co expects will grow by 2 to 3 per cent.

In slides released on Friday, Gucci also said it was targeting 6 billion euros (S$9.25 billion) in sales over the long term, compared with 3.89 billion last year.

Mr Bizarri said sales in renovated stores had seen double-digit growth since March. He said demand growth was very strong in Europe, the United States and China, and said sales in its Paris stores were up 10 per cent since January, despite the November attacks that scared away some tourists.

Sales of handbags at full price are up 7 per cent since January, ready-to-wear sales are up 66 per cent and shoes sales are up 46 per cent, according to figures released by Kering at an investor day on Friday.

"We are fighting for market share, and to win we need to be desirable and different," Mr Bizarri said.

He said Gucci wants to attract new clients, notably the fickle and ultra-connected "millenials", and has broadened its range with entry-level leather goods, jewellery and scarves. It also aims to triple online sales currently about 3 per cent of the total.

While its operating margin fell from 32 per cent in 2013 to 26.5 per cent last year, Mr Bizarri said he thinks he can gradually restore it to 30 per cent over the medium term.

REUTERS