By Mimosa Spencer and Elisa Anzolin
MILAN/PARIS (Reuters) - Gucci creative director Sabato De Sarno takes to the runway in Milan on Friday, in a high-stakes designer debut for the Italian label’s owner, French luxury group Kering (LON:0IIH).
De Sarno’s Gucci catwalk presentation – one of the industry’s most highly-anticipated shows this year – will serve as an aesthetic reset for the brand, aimed at reigniting sales, but it is also the first major test of a sweeping overhaul at Kering.
Efforts to regain momentum at the label, which accounts for the bulk of sales and profits at Kering, have prompted broad change in the group’s top management.
The group has also taken steps to broaden its revenue sources, announcing plans to buy high end perfumer Creed in June and a 30% stake in fashion label Valentino in July.
Although it was one of the biggest success stories in fashion in recent years, Kering's star label struggled to capitalize on a post-pandemic rebound that fuelled surging sales at rivals, such as LVMH-owned Louis Vuitton and Dior.
Group managing director Jean-Francois Palus is now stepping in to run the brand while the company seeks a more permanent replacement for chief executive Marco Bizzarri, who leaves following De Sarno’s first show Friday.
Bizzarri and the label’s previous creative director Alessandro Michele had been credited with the brand’s soaring success, doubling sales between 2015 and 2019 to nearly 10 billion euros, but lost ground to rivals, who invested heavily in marketing during the pandemic.
In the run-up to De Sarno's debut, executives at Gucci have been focused on timeless fashions and higher-priced products – and showcasing them in specialized shops catering to ultra wealthy clients – while increasing marketing and the number of collections.
“We believe the quiet progress being made on product, price and merchandising sets the right foundation for Sabato De Sarno's new chapter at the brand,” said analysts at RBC, flagging company moves to reduce the label’s entry price offer while adding new products at higher prices.
Kering may need to invest more to catch up with rivals like LVMH (EPA:LVMH) and Hermes, potentially prompting a revision of margin expectations, analysts say.
“We don’t think that a margin reset would be badly received by the market,” said Carole Madjo, analyst with Barclays (LON:BARC).
De Sarno's new design style will be key to reigniting brand heat, not only for drawing shoppers into boutiques, but can also serve as a template to follow as stores are refurbished.
The designer's first major advertising campaign for Gucci, made public in August, features Daria Werbowy, a model who had retreated from the fashion scene after dominating the runway in the early 2000s, appearing in a slim bathing suit and chunky, gold “Marina Chain” jewellery.
A fall fashion campaign from the label, which recently wiped all posts from its Instagram account, meanwhile, maintained a "recognizable Gucci aesthetic" while not committing "too much to any one direction," said industry publication The Impression.
"It becomes now very important that the new Gucci team will score some goals and win some matches, to give investors confidence that we are indeed on the right path," said Luca Solca, analyst with Bernstein.