Gucci to Focus on Gucci

Robert Polet, new chairman and ceo of the Gucci Group NV (Amsterdam), said his seven-year plan includes doubling the revenue of the Gucci brand.

Polet, who took over in April from Domenico De Sole, said he also planned to reposition the loss-making Yves Saint Laurent fashion division and to build on the success of the leather goods label Bottega Veneta.

But he said Gucci, the luxury arm of Pinault-Printemps-Redoute S.A. (Paris), would not be acquiring new brands, nor would it dispose of its existing labels over the next three years. “I am very confident that we can do this with Gucci’s current positioning at the high end of luxury distribution,” Polet said in an address at the British Museum.

Polet, who ran the global ice cream and frozen foods division of Unilever (London) before moving to Gucci, said management had taken its eye off the ball — the Gucci brand — while building the third-largest luxury group, after LVMH Moët Hennessy Louis Vuitton (Paris) and Compagnie Financière Richemont SA (Geneva, Switzerland). Foremost in Polet’s plans is raising Gucci’s gross margins to 70 percent — they have slipped to 68 percent — and focusing on its historic made-in-Italy quality and skills.

“Gucci cannot be separated from Italy and there will not be a Gucci brand made in China,” he said, though he sees Asia, especially China and perhaps India as growth areas. Gucci currently draws 33 percent of its revenue from Europe, 22 percent from the Americas, 27 percent from Japan, 16 percent from greater Asia and 2 percent from the rest of the world.

The next step, he said, is to find “the sweet spot” of desirable product mix and customer recognition at Saint Laurent. He also projected break-even earnings for Bottega Veneta next year and rising revenues rising in the next three years; and plans to bring Boucheron and Sergio Rossi footwear back to profitability by scaling back ambitious expansion plans.

For its small creative brands, including Alexander McQueen, Balenciaga and Stella McCartney, Gucci will invest money for three more years, at which time they must show a profit. He did not say what would happen if that goal was not met. An earlier brand strategy of licensing agreements may be revived for these emerging brands, he added, citing McCartney’s recent licensing collaboration with Adidas.

Polet criticized the strategy of De Sole and creative director Tom Ford, who left Gucci after a power struggle earlier this year. Their strategy was to open stores for all brands at top speed, which involved heavy investment before the retail return came.

Serge Weinberg, PPR ceo, said that Gucci’s stores in China, including a flagship store in Shanghai, were already breaking even. He added that Gucci’s revenue was up 14 percent in the first six months of 2004.