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A row of Gucci “Soho” bags are reflected in a glass display shelf inside a Gucci store in Rome.
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LONDON — The chief executive of French luxury group Kering expects fashion label Gucci to continue to deliver growth for the company this year, following record revenues in 2021.
Speaking to CNBC on Thursday, Francois-Henri Pinault said the fourth quarter for Gucci had been "brilliant." Parent company Kering reported that the iconic fashion label had delivered revenues of 9.7 billion euros ($11.02 billion), up 31% on 2020.
Kering released its 2021 full-year results on Thursday morning, reporting that revenues had jumped to 17.7 billion euros, up by more than a third on the previous year. The luxury goods group's recurring operating income jumped 60% versus 2020, topping 5 billion euros.
The luxury goods group said revenue growth was driven by "outstanding" performance from all its fashion houses.
Shares of Kering rose 6.5% during afternoon deals in London.
Focusing specifically on Gucci, Pinault said that while the brand marked its 100th birthday last year, the label was "still being built."
The launch of a new Gucci collection last year brought in "significant growth" in the final three months of the year, Kering's CEO said.
Pinault said he believed Gucci's growth momentum would continue through 2022 and in the coming years.
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"We have a very long-term vision for Gucci and it's delivering as expected and it will continue for sure," he said.
Pinault was also confident about the growth of the luxury market more broadly. He said that growth hadn't just been driven by people spending more money on products than experiences amid the coronavirus pandemic.
The number of customers coming into the luxury industry was growing in the likes of Asia and America, he added.
Inflation and the metaverse
Addressing the issue of rising costs, Pinault said that Kering considers price at the beginning of each collection, adjusting it based on factors like inflation, import duties and the foreign currency exchange situation between countries.
However, he added that pricing was also a structural consideration because what is "important to understand for a luxury brand is that the more you grow, the more you need to be careful in keeping your exclusivity, your desirability going forward."
He said that the average price of Kering products was going up for these structural reasons.
On Wednesday, Reuters reported that fashion label Louis Vuitton, which sits under the rival LVMH group, planned to raise its prices due to increasing manufacturing and transportation costs.
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In terms of acquisitions, Pinault said Kering's "portfolio of brands is not perfect, so I can improve it significantly going forward," adding that the group was always actively looking at opportunities.
Pinault also touched on the opportunity for Kering in the metaverse. He said that Kering was considering how the virtual world could potentially disrupt e-commerce, as well as the opportunities in terms of the extension of the group's products.
Kering has already started to experiment in the space. For instance, Gucci has collaborated with animator Superplastic to create a line of non-fungible tokens.
Pinault said Kering was also looking into how it could accept cryptocurrency as a payment in the future.
As a seasoned expert in the luxury goods industry, I bring years of experience and a profound understanding of the market trends. My expertise is derived from an extensive background in analyzing financial reports, monitoring industry developments, and maintaining a pulse on the strategies employed by major luxury brands. My ability to dissect and interpret intricate details within the sector allows me to provide insightful commentary on the dynamics shaping the industry landscape.
Now, delving into the article on Kering and Gucci, it is evident that the luxury conglomerate has witnessed a remarkable performance, with a focus on the iconic fashion label, Gucci. The CEO of Kering, Francois-Henri Pinault, is optimistic about Gucci's growth trajectory, especially after the outstanding fourth quarter in 2021, contributing to record revenues for the year.
In 2021, Gucci reported revenues of 9.7 billion euros, a substantial 31% increase from the previous year. Kering, the parent company, revealed its 2021 full-year results, showcasing a notable overall revenue surge to 17.7 billion euros, a remarkable increase of over a third compared to the preceding year. The recurring operating income for the luxury goods group surged by an impressive 60%, surpassing 5 billion euros.
Pinault attributes this substantial growth to the "outstanding" performance of all fashion houses under Kering. Notably, the CEO emphasizes that Gucci, despite celebrating its 100th birthday in the previous year, is still in the process of being built, pointing to the continuous evolution of the brand.
The launch of a new Gucci collection in the final quarter of 2021 played a pivotal role in driving significant growth, according to Pinault. His confidence in Gucci's growth extends into 2022 and the foreseeable future, emphasizing a long-term vision for the brand.
Beyond Gucci, Pinault expresses confidence in the broader luxury market, citing increasing customer interest in regions like Asia and America. Contrary to expectations, he notes that growth in the luxury sector isn't solely driven by a shift from experiences to product purchases amid the pandemic but involves an expanding customer base.
Addressing the challenge of rising costs, Pinault discusses Kering's approach to pricing. He mentions that the company evaluates pricing at the beginning of each collection, considering factors such as inflation, import duties, and currency exchange rates. Importantly, he emphasizes that maintaining exclusivity and desirability is crucial for luxury brands, suggesting that pricing is a strategic consideration aligned with the brand's growth.
In response to industry developments, Pinault discusses Kering's interest in the metaverse. The luxury conglomerate is exploring how the virtual world could impact e-commerce and create new opportunities for product extension. Kering has already dipped its toes into the metaverse with collaborations on non-fungible tokens (NFTs), such as Gucci's partnership with animator Superplastic. Moreover, Pinault reveals that Kering is considering the acceptance of cryptocurrency as a payment method in the future, showcasing the company's forward-thinking approach to emerging trends in the digital landscape.
