French luxury group Kering wants to get its top brand Gucci “back on track” by making it even more expensive and luxurious. The group is forced into a higher-end strategy as both sales and profits fell in 2023.
Kering’s year ended with a 17 % net profit drop (still good for 2.98 billion euros) and 4 % less sales (19.57 billion euros). It was a difficult year that once again fell short of expectations, CEO François-Henri Pinault admits.
Flagship Gucci saw its sales fall 6 % to 9.9 billion euros. The group’s jewellery and eyewear brands did perform well, but Yves Saint Laurent also recorded a sales decrease of 4 % and Bottega Veneta even went 5 % lower. The only brand managing to raise its sales was Balenciaga.
Pinault wants to fully commit to Gucci this year and will keep investing: that will put pressure on the company’s results, but the multibillionaire is going for the short pain to achieve “long-term gains”. A new creative director joined Gucci in January, whose management was already replaced last year.
Just as Burberry and LVMH pointed out earlier, it appears important for luxury brands today to market themselves as exclusive and expensive. The customers currently dropping out are middle-market consumers who afford the occasional luxury item. However, the richest target group does not need to save money and thus becomes more interesting again.