Professional Documents
Culture Documents
Goods Activity: Gucci Group: A Broad, Diversifi Ed Product Portfolio
Goods Activity: Gucci Group: A Broad, Diversifi Ed Product Portfolio
141
196
278
336
382
398
426
22
33
157
39
41
41
173
51
46
66
187
62
58
75
198
65
60
75
207
83
74
62
31/10/2000 31/10/2001 31/10/2002 31/10/2003 31/12/2004
GUCCI
YVES SAINT LAURENT
OTHER
BOTTEGA VENETA
Number of directly-operated
stores
PPR
Presentation of the Luxury
A controlled distribution network
Management of brands and brand image is tightly controlled through the distribution network. The carefully controlled development of
an integrated distribution network with a sound geographical basis has been a key strategic focus for Gucci Group. Fashion goods and
accessories are mainly sold in directly-operated stores which are designed according to a specic concept for each brand, ensuring
consistency in terms of product display and service quality around the world. The 426 directly-operated stores generated 54% of Gucci
Group revenue in 2005.
Gucci Groups products are also distributed through a selected number of exclusive franchise stores, duty-free boutiques, department and
specialty stores. The Gucci Group Watches activity markets its products directly through jewellery stores on most major markets,
or through third parties. YSL Beaut focuses on locations which correspond best to its product prestigious image, marketing its products
through subsidiaries in upscale perfume shops, department stores and duty-free boutiques.
A rigorous communication policy
Creative design, product quality and brand image are closely linked in the luxury goods industry. Through rigorous management of brand
image, tight communication policy, outstanding product quality and a carefully controlled distribution network, Gucci Group has succee-
ded in strengthening and reinforcing its brands leading status over the past few years. The goal of the communication activities, which
combine fashion shows, advertising campaigns, public relations, special events and store displays, is to maintain the brands exclusive
image while ensuring high prole and consistent visibility and reinforcing their market positioning at the international, national and local level.
The Groups activities Luxury Goods
Contribution of each brand to 2005
recurring operating income
As % of recurring operating income
124.6%
3.5%
-16.9%
4.0%
-15.2%
GUCCI
BOTTEGA VENETA
YVES SAINT LAURENT
YSL BEAUT
OTHER
Reference document 2005
Goods activity: Gucci Group
Strategy
Gucci Groups strategy is based on three main objectives: ensuring revenue growth and protability at Gucci Group, refocusing on the
Gucci brand and assigning a specic task to each brand within the portfolio. The latter point strengthens the coherence of the multi-brand
strategy.
In order to implement its strategy, Gucci Group has overhauled its organisational structure. The Group has granted substantial autonomy,
within specic guidelines, to the CEOs of the various brands who are now in charge of design, merchandising and all aspects of the
operating and nancial results of their respective brands.
Regarding the supply chain, Gucci Group takes care to guarantee exceptional product quality. To achieve this, it selects the very best
materials and exercises very strict controls over production, whether in-house or by outside partners. Prototype development and the
entire manufacturing process are monitored constantly for quality control. In addition, Gucci Group is making its supply chain more exible
in order to rotate its collections and replenish stocks faster during the season. The group also keeps a watchful eye on practices by the
main competitors in luxury goods and other industries in order to stay on top in terms of supply chain.
Outstanding nancial performance
In 2005, Gucci Group posted revenue of 3,036 million, an increase of 11.9%, representing 17.1% of the PPR Groups revenue. It also gene-
rated operating income of 390 million, an increase of 35.4%, representing 34.1% of PPR operating income (excluding holding company).
2,712
288
3,036
390
2004
(1)
2005
REVENUE (IN MILLION)
RECURRING OPERATING INCOME (IN MILLION)
Revenue and recurring operating income
(1)
Adjusted for the impact of the transition to IFRS and change in the reporting period of Gucci Group.
PPR
Brand established in
1921
a1,807 M
2005 revenue
a485 M
2005 recurring
operating income
5,611
employees at end 2005
207
directly-operated stores at end 2005
Business concept
Founded in Florence in 1921, Gucci built its reputation by specialising in the creation of high-quality
leather goods. As Gucci Groups agship brand, it is now one of the most prominent and protable
brands in the luxury goods sector. Gucci manufactures and markets leather goods (handbags, small
leather goods and luggage), shoes, ready-to-wear, silks and jewellery. The products are sold exclusively
through directly-operated stores and through exclusive Gucci franchise stores, department stores and
specialty stores around the world. In addition, Gucci manufactures and distributes watches through
Group-owned Gucci Group Watches in Switzerland. Licensed distributors manufacture and distribute
Gucci brand eyewear and fragrances.
Positioning
Guccis strong heritage is built on key critical foundations of uncompromising quality, superior crafts-
manship and made in Italy.
The Creative Leadership strengthened the focus on iconic brand symbols (Horsebit, Bamboo, GG logo,
Green/Red/Green web, Flora), re-inventing them in a modern and luxurious way. Their understanding
and appreciation for the brands heritage, together with the extraordinary talent in providing a fresh and
modern interpretation, drove Gucci to the excellent 2005 results.
Gucci has thus conrmed its outstanding growth potential in its main product categories and regions
worldwide, through the creative and innovative appeal of its offering, underscored by the increased
emphasis on communication policy and the development of exclusive goods.
Strategy
Guccis growth strategy emphasises three main areas of action: capitalising on its state-of-the-art
positioning in fashion, innovation and product quality; maintaining the strong momentum in leather
goods and shoes; exploiting new opportunities in jewellery, ready-to-wear and watches, as these
product categories have recorded improved results since the fourth quarter of 2005 and should continue
to post strong growth in 2006.
Breakdown of 2005 revenue
by geographical area
Breakdown of 2005 revenue
by product category
EUROPE
JAPAN
ASIA PACIFIC EXCLUDING JAPAN
NORTH AMERICA
OTHER
LEATHER GOODS
SHOES
READY-TO-WEAR
WATCHES
JEWELLERY
OTHER
32.8%
3.3%
20.5%
22.7%
20.7%
6.8%
54.3%
12.2%
5.1%
12.7%
8.9%
The Groups activities Luxury Goods
Reference document 2005
Gucci operates in 55 countries, and thanks to strong global brand recognition the brand is successfully developing its presence in the
emerging markets. The global balance of the revenue breakdown by geographical area ensures that future results will come from a com-
bination of continued growth in the major markets (Europe, Japan, and USA) and exploiting opportunities in fast growing new markets,
such as China where Gucci owned seven stores as at the end of 2005.
Financial results
In 2005 Gucci revenue amounted to 1,807 million with an increase of 13.6%. Directly-operated stores represented 71% of 2005
revenue and recorded a 14.7% increase. Gucci posted double digit growth in each of the major geographical regions, i.e. Europe (which accounts
for 32.8% of revenue), USA (20.5%), and Asia Pacic excluding Japan (20.7%). Leather goods, the cornerstone of the Gucci heritage, continue to
be the core business, representing 54% of revenue.
Gucci Group recorded a strong increase in recurring operating income, which rose by 14.7% to 485 million, with operating margin at 26.9%,
compared to 26.6% in 2004.
2005 highlights and outlook
In July 2005, Mark Lee was appointed CEO of the Gucci brand. Mark Lee was formerly President and Managing Director of the Gucci
brand from November 2004 and has worked with Gucci Group since 1996.
In terms of new products, 2005 was characterised by the launch of La Pelle Guccissima, the rst signature leather collection introduced in
August. La Pelle Guccissima is a perfect expression of a modern classic, the Gucci tradition in a new, luxurious interpretation. The legen-
dary Gucci symbols, GG logo and the horsebit, have been redened by Frida Giannini, Creative Director of the brand, using precious and
innovative materials. The extremely positive reaction of the market contributed to increased leather goods and footwear activity, making
La Pelle Guccissima a new core business to be renewed each season.
In 2005, Gucci opened important stores in a number of key markets, including Canada (Vancouver), South Korea (Hyundai Ulsan),
and the USA (Naples). At the end of 2005 Gucci has 207 directly-operated stores worldwide.
As the brand approaches its 85
th
anniversary (19212006), the goal for the coming year is to strengthen the presence both in
consolidated markets and in emerging countries, leveraging the positive momentum for accessories and shoes.
1,590
423
1,807
485
2004
(1)
2005
REVENUE (IN MILLION)
RECURRING OPERATING INCOME (IN MILLION)
Revenue and recurring operating income
(1)
Adjusted for the impact of the transition to IFRS and change in the reporting period of Gucci Group.
PPR
The Groups activities Luxury Goods
Brand established in
1966
a160 M
2005 revenue
a14 M
2005 recurring
operating income
741
employees at end 2005
83
directly-operated stores
at end 2005
Business concept
Bottega Veneta meaning Venetian workshop creates luxury goods based on its core values of
quality, craftsmanship, exclusivity and discreet luxury. The brand began as a leather goods house made
famous through its signature intrecciato, a unique leather weaving technique created by the Bottega
Veneta artisans, and it has now a full product range of leather goods (handbags, small leather goods and
full collection of luggage), men and womens ready-to-wear, shoes, and other accessories.
Positioning
From its beginning, Bottega Veneta has stood for the highest craftsmanship, the choice of nest
materials product, design innovation and softness of its products. It was the rst brand to introduce the
deconstructed bag as opposed to the usual rigid construction of handbags coming from the French
school. However, at the time the brand was bought by Gucci Group in February 2001, the company
was in a difcult position having gone through a number of failed re-positioning attempts following the
departure of its founder and his creative vision in the early 1980s.
Under the creative leadership of Tomas Maier and a new management team, Bottega Veneta has
re-established its high-end luxury positioning with products able to satisfy the most demanding clients.
By combining traditional luxury goods values exclusivity, craftsmanship and the highest quality with inno-
vation, its products are modern with timeless elegance. Bottega Veneta is synonymous with understated
elegance and in keeping with the brands slogan, When your own initials are enough, the label is only
present inside the products. Bottega Veneta owes its exceptional product quality to the work of its
meticulous craftsmen based in its workshop in Vicenza.
Bottega Veneta products are sold exclusively through a tightly-controlled distribution network of
directly-operated stores, exclusive franchise stores and carefully selected department and specialty
stores around the world. At the end of 2005, Bottega Veneta had a network of 83 directly-operated
stores, which generated 87% of the brands 2005 revenue.
Breakdown of 2005 revenue
by product category
LEATHER GOODS
SHOES
READY-TO-WEAR
OTHER
Breakdown of 2005 revenue
by geographical area
JAPAN
EUROPE
NORTH AMERICA
ASIA PACIFIC EXCLUDING JAPAN
OTHER
25.1%
0.3%
22.5%
33.2%
18.9%
5.2%
85.0%
2.8%
7.0%
Reference document 2005
Strategy
Bottega Veneta continued to strengthen its position as a brand dedicated to life-style through its jewellery collections, furnishings (decorative
accessories, tableware and ofce items, candles and interior fragrances) and gift items, whose launch was a great success.
Bottega Veneta is and will remain an exclusive and discreet niche market luxury brand.
Financial results
In 2005, revenue amounted to 160 million, a 60.2% increase year on year. Thanks to the consistent strengths of the collections, reve-
nue for the period was driven by strong performance in both existing and in the newly opened directly-operated stores as well as in the
wholesale distribution channel. In 2005, Bottega Veneta recorded a prot and exceeded its initial target, with recurring operating income
at 14 million.
2005 highlights and outlook
Bottega Veneta had many successes in 2005. The brand opened 18 new directly-owned stores, increasing its presence signicantly in
the Asia Pacic excluding Japan, where the brand opened 10 new stores in the year.
New handbag styles launched in 2005 were major successes and styles such as the Cocker and the Ball Bag are in the top 10 best
sellers along with the long standing Veneta. The exclusive limited edition handbag the Cabat was described by the leading Italian
newspaper, Il Corriere della Sera as the desired object of excellence for any woman. The Cabat continues to be produced in such limited
quantities that many stores now carry waiting lists.
In March 2005, Tomas Maier presented the brands rst womens ready-to-wear runway show which received very positive reviews;
the second runway show held in October 2005 received even stronger reviews, conrming the success of the collections. The runway
shows led to the strong development of the ready-to-wear, shoes, jewellery and belts activities, whilst highlighting the outstanding level
of craftsmanship in handbags and leather goods. The feedback from the new 2006 Spring/Summer collections has been already very
strong and gives a positive outlook for 2006.
The brand plans to open new stores in 2006. After opening a agship store on Avenue Montaigne in Paris (300 sq.m.), the company plans
to open a new store in the Omotesando area in Tokyo (270 sq.m.), and another one in Kalakua, Honolulu (256 sq.m.).
100
-7
160
14
2004
1D