Gucci Group, an Italian company with a Dutch address that sells French fashion, does quite well in Japan, too. The fashion house makes and markets upscale handbags and other leather goods, shoes, ready-to-wear clothing, cosmetics, fragrances, skin care, jewelry, and watches. In addition to the Gucci brand, the company sells products under such major premium brands as Bottega Veneta and Yves Saint Laurent. Gucci operates more than 680 boutiques worldwide and wholesales its products through franchisees and high-end department stores. French retailer PPR has purchased almost all of the remaining shares in the company, taking its interest up to 99.9% in 2010.
Gucci family squabbles and imprudent licensing once nearly doomed the firm. New management revived it with fresh product lines and stricter licensing, as well as heavy investing in its Asian presence. In the wake of the executive shakeup that followed its acquisition of Gucci, PPR has worked to redirect the company's focus back to the iconic leather goods that were once Gucci's bread and butter. The strategy is paying off, as sales of the manufacturer's leather goods have grown year over year, now accounting for more than half of Gucci's sales.
Gucci, which generated more than a quarter of its parent's 2010 revenue, has been working to extend its reach into luxury markets worldwide, as well. The company has continued to expand into Asia with new stores and is extending its reach into high-growth markets such as China and India. Gucci aggressively wants to double revenue and rebuild its brand's gross margin closer to 70%.
Gucci is known for its huge waves of growth. The company nearly doubled in size with the 1999 purchase of Sanofi Beauté (renamed YSL Beauté), which included most of French fashion house Yves Saint Laurent (YSL). Gucci has continued its quest for growth, adding such luxury brands as Boucheron, Alexander McQueen, Bédat & Co., Stella McCartney, and Bottega Veneta. Since its acquisition of Yves Saint Laurent, though, the company scaled back on the brand's US operations.
Having launched a Forever Now ad campaign in 2010 to highlight its dual expertise as a "heritage house with modern sensibilities," Gucci branched out by debuting its first children's collection of ready-to-wear and accessories emblazoned with a teddy bear icon. The collection is made in Italy and is geared toward newborn to 24 months and 2- to 8-year-olds.
The luxury firm's also concentrating on reworking partnerships and reorganizing parts of its business to streamline its operations. Gucci in 2009 exited its franchising agreement with Brand Marketing India, which distributes the Calvin Klein and Tommy Hilfiger brands in the country. Soon after, it entered into a contract with Luxury Goods Retail to handle distribution in India and looks to convert the deal into a joint venture, in which Gucci will hold a 51% stake. The joint venture deal mirrors similar moves by Marks & Spencer and other international firms, allowing for greater control of the brand and day-to-day operations by owners. It reorganized its watch unit, as well, and folded it back into the Gucci brand business. As part of the restructuring Bedat & Co. was placed under Boucheron management.
Gucci's other endeavors, such as fragrances, are possible through partnerships, such as its alliance with Procter & Gamble to develop a line of Gucci-branded fine fragrances. – less
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