Gucci Gift 2018 Eyewear Collection

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ABOUT

The House

Founded in Florence in 1921, Gucci is one of the world’s leading luxury fashion brands. At the beginning of 2015, Gucci embarked on a new chapter in its history under the direction of a new management team led by President and CEO Marco Bizzarri and Creative Director Alessandro Michele. Their new, contemporary vision for Gucci rapidly re-established its reputation as one of the world’s most influential luxury fashion brands. Four years on, the indisputable success achieved by Gucci, from both an esthetic and a business perspective, has confirmed that the turnaround was not merely a “fashion moment." Thanks to a profound understanding of the brand’s values and essence, the management team has given Gucci a new contemporaneity by prioritizing creativity, taking up the mantle as the voice of self-expression.

The driving force behind Gucci’s reinvention is to be found in a new, contemporary corporate culture of employee empowerment and open communication, built on key values that feed into the whole organization through the encouragement of innovation and risk taking, a sense of responsibility and respect, an appreciation for diversity and inclusion, and a commitment to excellence in execution. Gucci products continue to represent the pinnacle of Italian craftsmanship and are unsurpassed in terms of their quality and attention to detail. Influential, innovative and progressive, Gucci is reinventing a wholly modern approach to fashion. Eclectic, contemporary, romantic—Gucci products represent the pinnacle of Italian craftsmanship and are unsurpassed for their quality and attention to detail.

Marco Bizzarri - President and CEO

Alessandro Michele - Creative Director

François-Henri Pinault - Kering Chairman and CEO

Kering - Parent Company

$473.18 per share - Kering Stock Price as of 12.31.18

Highlights

Valued at $12.9 billion USD

4th Most Valuable Luxury Brand Worldwide

Most Luxury Retail Stores Worldwide

#38 in 2018 Interbrand Best Global Brands ranking

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Gucci Cruise 2019 Collection

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YEAR IN REVIEW

2018 Key Figures

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$8,285 million

in revenue

$3,275 million

in recurring operating income

14,628

average number of employees

540

directly operated stores

34

markets with active online store

Revenue

33.4%

increase from 2017 to 2018

Revenue growth amounted to 44.1% in the first half of the year and remained extremely robust in the second half despite a very high basis of comparison, coming in at 31.3% at constant exchange rates (versus 45.7% in the second half of 2017). Retail sales generated in directly operated stores jumped 38.3% at constant exchange rates, fueled by increasingly higher traffic and enhanced productivity in the brand’s stores. This pushed up the average sales rise for directly operated stores to around 33% on a comparable basis over the last three years. Sales generated in the wholesale network advanced 30.7% based on comparable data, with the number of points of sale relatively stable year on year.

All of the brand’s main markets reported robust growth during the year.

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Revenue and recurring operating income

Number of directly operated stores by region

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Breakdown of revenue by:

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North America: Took over from Western Europe as the main growth driver for sales generated in directly operated stores, with a comparable-basis increase of 43.6%. This performance illustrates the brand’s success both among Millennials and a more traditional clientele, thanks to the depth and breadth of its product offering. North America was also by far the highest performing region in terms of online sales, which surged by over 60%.

Japan: In-store sales advanced by an impressive 35.7% on a comparable basis, led by the recovery in tourist numbers seen since the second half of 2017, especially for Chinese tourists, as well as domestic market share gains.

Western Europe: The brand was still highly attractive to both Europeans and non-Europeans, which helped offset the region’s lower number of tourists and drove a 28.5% revenue hike for the region overall. In emerging markets, revenue vaulted 42.7% at constant exchange rates, with all regions contributing to this excellent performance.

Asia-Pacific: Revenue surged 45.0% and strong sales momentum with Chinese customers drove very solid growth in Mainland China as well as significant revenue increases in the region’s other markets.

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All of the brand’s main product categories recorded very strong sales rises during the year in directly operated stores, giving Gucci a healthy and balanced growth profile. These excellent sales figures demonstrate the success of both the brand’s new collections and carry-over.

Following the work carried out to renew and refresh its offering between 2015 and 2017, in 2018 the proportion of carry-over, particularly for leather goods, reached the target level that Gucci had set itself, helping to make the brand’s performance even more resilient. Royalties were up in 2018, primarily due to a robust showing from eyewear, licensed to Kering Eyewear, and a good second half for the fragrances and cosmetics business operated by Coty.

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As of December 31, 2018, Gucci operated 540 stores directly, including 229 in emerging markets. A net 11 new stores were added during the year. The brand now has an overall network that is adapted to its operations in terms of store numbers, but it has identified opportunities for improving its distribution in certain regions. This is particularly the case for travel retail, which saw the most store openings in 2018.

Apartfrom these targeted openings, Gucci’s focus is still on increasing organic growth by pursuing its refurbishment program for existing stores. As of December 31, 2018, around 44% of the store network had adopted the new concept and a large number of stores that have not yet been refurbished were fitted out and furnished along the lines of the brand’s new design aesthetic.

Strategy

Gucci’s willingness to challenge traditions and conventions has created significant disruption, delivering an important and sustained competitive advantage. The focus on creating an increasingly emotional bond between the brand and its clients has been one of the key drivers of Gucci’s industry-leading performance over the past four years. Deepening engagement with clients across all of the brand’s touchpoints is critical for its long-term success, especially in a technologically connected society. This is achieved through the careful implementation of a content strategy centered on creating an emotional and engaging narrative, which is authentic and always consistent, season after season.

In 2018 Gucci continued to deliver outstanding growth, substantially above the industry average, as a result of the successful implementation of its innovative and bold strategy. This performance was achieved by the continued optimization and excellence of the business model, rather than relying on the expansion of its retail footprint or product category extension. In terms of products, all categories have now fully transitioned to the new brand aesthetic, while optimizing the offer in terms of the number of product models, price clusters and store network distribution.

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Key Elements of Gucci's Success

in 2018:

Maximizing the efficiency of the product assortment

Roll-out of the new store concept

 Seamless blend of e-commerce functionalities and rich storytelling

Continuous focus on delivering a best-in-class experience

Gucci Gift 2018 Collection

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SUSTAINABILITY

A Culture of Purpose

Gucci Equilibrium, is a collection of all our values, positive instincts and ambitions. It’s a balance of the aesthetics of the things we produce with the ethics in which we believe. We are driven by our Culture of Purpose (central to everything you’ll find here at Gucci Equilibrium).

A sense of purpose defines and articulates the values that make us who we are. Everything we do is for a reason. We know that our brand and our people are committed agents of social and environmental change and we take that seriously.

A Culture of Purpose means that we can answer the expectations of our customers, our employees, our suppliers and everyone in the wider Gucci family. But, in order to have real purpose, you need to demonstrate that you have integrity.

Integrity is what we value most at Gucci.

As a company, we strive to manage the planet’s finite resources, and build a culture of respect. At the same time, our people are also free to innovate, create, and grow. We call this state of affairs ‘Equilibrium’ – a balance of the aesthetic of what we do, with the ethics in which we believe.

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Pillars of Equilibrium

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ENVIRONMENT

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PEOPLE

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NEW MODELS

Our Culture of Purpose helps us to decide how we spend our time and where we place our energies. Today increasingly we dedicate time to protecting the earth and advancing sustainability. We have launched an Open Source platform where all key data is readily available, with the goal to facilitate collaboration with our peers and across sectors and to work together towards a sustainable future. A future in Equilibrium.

If there are essential rules for being an agent of change, it’s that you can never be satisfied and you have to keep striving for greater goals. We constantly set targets, measure our actions and report where we are in our journey. You can check out our core Environmental Policy here.

Our environmental core values:
Carbon Neutral
Sustainable raw materials
Chemistry that respects the planet
Waste Management
Paper and Packaging
Fur Free

Our people are the lifeblood of our organisation. It is imperative to us that they are given every opportunity to flourish. We encourage diversity, gender equality and active citizenship within our company, but also across our entire supply chain.

We think of the world as a complex ecosystem. Just like any ecosystem, all different actors must play their roles and be given the right conditions to flourish. So as we set and drive towards our goals on social justice, gender empowerment and creating economic value in the supply chain that can improve people’s lives, we constantly ask how we can best help other organisations to reach theirs too. Our goal is to harness true collaborative advantage. After all, we are all on this journey of humanity together.

We partner with organisations doing great things, so that we can learn from them. In return they harness Gucci’s strategic lens, creativity and reach in order to thrive. We are driven to create a meaningful impact, and that takes all of us working together.

We believe in:

Empowering Empoyees

Sharing Knowledge

Developing our Supply chain

Fostering Know-How

Responding to Change

Gender Equality and Diversity in the Workplace

Gucci is a pioneer and an innovator, and we love to transfer this positive disruption across everything we do. Since April 2018 when we opened the Gucci ArtLab, in Casellina on the outskirts of Florence, this spirit has been evident in bricks-and-mortar making it impossible to miss. The exterior walls feature young art talents who have worked with us, including Unskilled Worker, Ignasi Monreal, Angelica Hicks and Coco Capitan.

Inside, is testament to our relentless push towards a better, smarter future. Standing at over 37.000 square meters with over 900 employees, Gucci ArtLab is the tangible expression of our vital and forward-looking culture. This is a futuristic centre of both industrial craftsmanship and experimentation. Gucci ArtLab is the centre of product development and laboratory testing where we prototype for sample leather goods and shoe production.

It is the first centre in the world where designers enter with both a dream and  an idea, and leave with a physical and digital product. This is thanks to the laboratory and rapid prototyping technologies, research and development centre and the best technology for the production of products and its surrounding components.

Rethinking how we produce products and the materials we use, requires creativity. It also needs a step-change in both mindset and approach. We do everything we can to build the framework that will make such step-changes possible. For our employees we create maximum opportunities in volunteering for NGOs that share Gucci’s values. We believe that volunteering offers experiences that are uniquely fulfilling. 

We have challenged ourselves to look ahead and ask how we can ensure that sustainability becomes more efficient and effective throughout our business. To do this, we collaborate with incubator funds and accelerator programmes to support innovation in sustainable materials and processes. Gucci works with various organisations and external partners to stimulate disruptive innovation, identifying innovative start-ups and supporting them in scaling-up their technologies and new business models.

Gucci Cruise 2019 Collection

Gucci Cruise 2019 Collection

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OUTLOOK

Creating the Future

In 2019, in line with the strategic update presented at the Capital Markets Day held in June 2018, Gucci will continue to unleash its full potential across all product categories. The main drivers of the mid-term revenue evolution, which aims to double market growth, include: 

The opening in early 2018 of the Gucci ArtLab – a development and excellence center for leather goods and shoes located near Florence in Italy – marks a further step forward in the brand’s intense drive to reorganize and rescale its prototyping and production capacities.

Continuous sales-density improvement

Full roll-out of the new store concept

Organic growth of the wholesale business and tripled e-commerce volumes

Ongoing optimization of gross margin and operating leverage

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The purposes of this new center of excellence are to preserve the unique know-how developed by Gucci and to instill technological innovation enabling it to optimize production, a key factor underpinning the House’s strong growth.

The ArtLab also now houses Gucci’s École de l’Amour education program, which includes a Craftsmanship School (Scuola dei Mestieri), offering a six-month program to train students to professional standards; a Factory School (Scuola di Fabbrica), training technical production operators; and a Technical Academy to create experts in advanced technologies, with a focus on digital techniques in the creation process.

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This work forms part of a wider ambition, which will be pursued in 2019 and over the medium term, to make the brand’s supply chain and information systems more agile, responsive, able to absorb the expected rise in demand, and support the omni-channel model.

Thank You for a Great Year

Gucci has devised a communication policy designed to sustain the brand’s desirability and increase engagement levels of both existing and future customers of all ages and nationalities. It is based on a 360° approach using all types of traditional and innovative media as well as original partnerships with artists. Digital communication is particularly effective for creating a brand universe that is both unique and inclusive, and the investments that Gucci has made in this respect have enabled it to position itself as one of the most advanced luxury brands in this domain.

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© 2018 Guccio Gucci S.p.A. - All rights reserved. SIAE LICENCE # 2294/I/1936 and 5647/I/1936