The global geopolitical economy continues to be turbulent, and the luxury industry is in a critical period of transformation and transformation. After a round of recovery, how luxury brands will achieve sustained and stable organic growth has become the most concerned issue for investors.
Bloomberg industry research analysts have recently considered a variety of factors such as revenue growth, profit margin, market share, liabilities, economic environment, etc., and selected 50 companies worthy of attention, including the fashion industry. There are UNIQLO parent company Fast Retailing Group, Weimil parent company L Brands and Nike Group, and Gucci parent company Kaiyun Group has become the only luxury group selected.
According to the list data, Fast Retailing Group’s sales in the past year was US$18.9 billion and total assets were US$15.16 billion. It is estimated that the Group’s sales growth this year may be 8.9%, and earnings per share is expected to increase by 11%; L Brands In the past year, sales were $13 billion, total assets were about $7.62 billion, sales growth was 2.4% this year, and earnings per share fell 12.5%. Nike Group’s sales for the past year were $36.4 billion. The assets are about 22.6 billion US dollars. This year’s sales are expected to increase by 10.5%, and earnings per share will increase by about 16.5%.
It is worth noting that, thanks to the strong growth of Gucci, the luxury goods group Kaiyun’s sales in the past year was about 17.4 billion US dollars, with total assets of about 23.68 billion US dollars. According to Bloomberg analysts, the luxury goods giant, which has increased its revenue by more than 20% for seven consecutive quarters, may have a 4.1% decline this year. It is the only luxury group that Bloomberg believes will see a decline in sales this year, but Earnings per share will increase by 52.3%.
In fact, as early as last year, there were people in the industry who questioned whether Gucci could lead the Kaiyun Group to continue to lead. Whether consumers will be Gucci’s highly consistent style and aesthetic fatigue will still be the Damocles hanging on the brand. sword. Marco Bizzarri, CEO of Gucci, said in a video to employees last year that it is normal for brand revenue to slow down after an explosive growth. It is impossible to maintain a 50% to 60% increase in turnover every month.
Despite this, in the third quarter of FY18, Gucci’s sales increased by 35.1% to 2.1 billion euros in the same period of the previous year. The sales of Kaiyun Group surged 27.6% year-on-year to 34. In the first nine months, sales rose by 31.5% to 9.526 billion euros, exceeding the market expectation of 3.27 billion euros.
However, Bloomberg analysts’ predictions about the decline in sales of Kaiyun Group are not groundless. Compared with the recent intensive new measures released by competitor LVMH, the momentum of Kaiyun Group seems to be weakening, and the state of “aggressive” a year ago. In sharp contrast.
At the beginning of last year, Kailan Group CEO François-Henri Pinault said that he wanted to “eliminate” Louis Vuitton. Marco Bizzarri also said in an interview that he would achieve Gucci’s annual sales target of $10 billion. In June last year, Gucci suddenly announced that he would hold a show in Paris, held on the same day as Dior of LVMH, and directly burned the fire to the base of LVMH.
In addition to Gucci, Kaiyun Group also fostered two “Quasi Gucci”s, Saint Laurent and Balenciaga, and appointed another 16-year-old creative director, Daniel Lee, who worked at Celine for Bottega Veneta, another core brand of the group. The second echelon brand has contributed more sales to the group while avoiding the risk of Gucci falling out of favor.
LVMH boss Bernard Arnault, who knows the rules of the luxury industry, naturally will not let the Kaiyun Group arbitrarily provoke. In an interview with foreign media, he insinuated that competitors such as Kaiyun Group have been imitating in the past decade and think they Will not succeed.
After making up his mind to set off the glory of the cloud group, LVMH’s movements have become very quick and decisive. Rarely, a creative director shuffled and made a very controversial street trend opinion leader, Off-White. Virgil Abloh invited his majesty, and transferred Kim Jones, a designer who is good at branding, to Dior menswear. He also gave full support to Celine’s new creative director Hedi Slimane’s innovative initiatives, trying to use these three ace cards to hit the cloud back and forth.
After entering 2019, LVMH began to increase the suppression of Kaiyun Group. In the past, more than one month has passed many important changes.
First, in December last year, it spent $3.2 billion to acquire high-end hotel operator Belmond. Last week, it announced the acquisition of a minority stake in the New York designer brand Gabriela Hearst, but did not disclose the specific terms of the transaction. In addition, there were sources on Saturday that LVMH is negotiating with Off-White’s parent company, New Guards Group Holdings SpA. As of now, LVMH has not responded to this news.
Even more surprising is that LVMH also tried to create a brand new luxury brand by cooperating with popular hip-hop singer Rihanna. This is the second luxury brand launched from scratch after the founding of Christian Lacroix in 1987. A luxury brand launched in collaboration with a female star.
It is reported that LVMH attaches great importance to Rihanna’s first luxury brand, starting in Paris six months ago, and is responsible for Sidney Toledano, Chairman and CEO of LVMH Fashion Group, and the two most valued from Louis Vuitton and Celine. In the brand team, the manpower is handed over to Rihanna for communication.
It is not difficult to find that LVMH is accelerating the process of rewriting the rules of the luxury fashion industry to better compete with the Kaiyun Group for the young people market. However, some people in the industry pointed out that the above-mentioned various measures of LVMH have confirmed that they have been unable to ignore the established facts that Gucci threatened.
According to the fashion headline network monitoring, Gucci’s average global search index in the past 12 months is much higher than LVMH core brand Louis Vuitton, and together with Chanel was named the most popular luxury brand in 2018. Gucci’s brand value increased the most in the 2018 Global Best Brands list published by consulting firm Interband, which increased 30% to $12.9 billion compared to 2017.
Marco Bizzarri has said that it was a lucky thing to discover Alessandro Michele four years ago and appoint him as the creative director of the brand. Today the world changes too fast, and sticking to the rules is not an option at all. Although the brand is not perfect, he and the team I will do my best to improve what I am doing.
In order to maintain the brand’s uniqueness, Marco Bizzarri has begun to implement a new strategic plan, shifting the focus from product creation and marketing to a more core supply chain. In order to reduce the dependence on leather suppliers and shorten the delivery time, Gucci is gradually reducing the number of outsourcing leather goods suppliers. In addition to the largest factory Gucci ArtLab, it has also acquired 10 leather goods suppliers, and will acquire 10 more in the future. The proportion of leather products produced will drop from the current 75% to 40%.
Marco Bizzarri also stressed that with the influence of social media, consumers’ preferences are hard to understand, and the biggest challenge facing brands is how to avoid stagnation and be satisfied with the current success. Kaiyun Group is full of confidence in Gucci’s future and believes that Gucci is stronger than ever and is maintaining its unique competitive advantage different from all brands.
In order to focus more on the luxury goods sector, Kaiyun Group began to reduce the law. Last year, it sold Puma, Stella McCartney, Volcom and Christopher Kane brands. In order to maximize the freshness of consumers’ brands, Kaiyun Group did not make all the bets. Pressed on Gucci, in addition to the establishment of the “iron triangle” composed of Gucci, Saint Laurent and Balenciaga, is training Alexander McQueen to become the next “star luxury brand.”
Earlier, some sources said that Kaiyun Group had started negotiations with Mayhoola, a private equity fund of the Italian luxury brand Valentino parent company Qatar Royal Holdings, at the end of last year, or acquired Valentino, although neither party has responded to this news so far. Some analysts believe that the conclusion of the deal will help Kaiyun Group to further approach LVMH. According to the data, Valentino’s sales last year increased by 5% to 1.16 billion euros, and the valuation is between 2.5 billion euros and 3.5 billion euros.
Gucci’s strong performance in the past two years reflects the deeper essence of today’s luxury fashion industry, that is, business has to rely on creativity. However, economic growth is cyclical, and the luxury goods industry is also the same. Both LVMH and Kaiyun Group cannot be taken lightly and must be vigilant at all times. When the wallets of the most important Chinese luxury consumers began to tighten again and the retail environment became more complex, the market is reassessing luxury stocks, arguing that the industry is in jeopardy.
The signs of Gucci’s slowdown are also reflected in the capital market. Last year, Kaiyun Group’s share price increased by 8%, much lower than the 80% growth in 2017. The current market value is about 51.6 billion euros. On the 12th of next month, the group will release financial data for the fourth quarter and the full year, which will make LVMH and the industry tighten again.