Gucci for eternity?
Why not, says Robert Polet, president and chief executive officer of Gucci Group, who is helping steer its flagship brand toward his goal of doubling sales to more than $4 billion by 2012.
“It is 85 years old, but still very young, vibrant and contemporary, as well,” he said during an interview last week. “There’s always a risk for any brand to reach maturity. The strongest brands have been able to continually reinvent themselves, staying relevant and contemporary…translating the essence of a brand, but for today’s market.”
For the moment, Gucci is demonstrating the robust health of a teenager, as first-quarter sales rose 17.7 percent to 508.3 million euros, based on constant currency. That’s on top of an 18.4 percent constant-currency leap in 2005 to 1.82 billion euros. Doubling the sales in seven years requires compound annual growth of 10 percent and “we’re ahead of schedule,” Polet noted.
At the PPR annual shareholders’ meeting on May 23, François-Henri Pinault, the group’s chairman and chief executive, delivered a bullish outlook, thanks to strong prospects for luxury. Pinault trumpeted the performance of the luxury division, especially double-digit growth at the Gucci and Bottega Veneta brands.
Not that the company is resting on its laurels.
“The challenge that you always have when you have success is to stay on the ball, to not be complacent,” said Polet, who listed men’s wear, jewelry and watches as categories still in need of development. He also stressed that Gucci is seeking “quality growth” in all business areas.
Since arriving from Unilever’s ice cream and frozen foods division in July 2004, Polet has helped Gucci Group seize on two key luxury trends: trading up — Gucci increased the price of its top-selling handbag by 200 euros — and ultraexclusivity, led by exceptional products from Boucheron, Balenciaga and Bottega Veneta.
An upbeat executive and dynamic leader with an infectious positive streak, Polet has given his brand executives more autonomy and set ambitious goals to drive them forward. Balenciaga already has reached profitability, and the group’s other designer brands — Stella McCartney and Alexander McQueen — are said to be on track to reach their break-even deadlines.
Gucci remains Polet’s “primary and first focus,” as it is the largest and most profitable brand. He said other brands in the group could learn much from Gucci’s well-oiled operations, in which functions such as merchandising and product development work together and link into the supply chain. While such mechanisms are invisible to the press and consumers, it’s “very efficient and very professional” and assures good delivery and quality control, Polet said.
Since Polet arrived, Gucci has endured some turbulence in its design department. The trio of Tom Ford underlings recruited to succeed him ultimately were whittled down to one, Frida Giannini. Still, many detected in the change a symbolic end to fashion’s so-called star system, in which the celebrity of a designer sometimes eclipsed the name on the end of the runway.
“A brand always has to be more powerful than a certain designer,” Polet said. Especially if it is striving for infinity. “Many people over time will contribute,” he noted.