How Far Can Aggressive Gucci Go?

Aggressive

How far can we go?

Of course, we can't rely on luck and geomancy for a long time. The industry is still driven by creativity and will never change.

Thanks to the bold product ideas and excellent business strategy of Gucci creative director Alessandro Michele and CEO Marco Bizzarri, Gucci has been leading for 8 consecutive quarters.

The industry first entered the 6 billion euro club last year and defeated Hermes for the first time in its annual revenue scale.

According to the world clothing and shoe net, LVMH never reveals its core separately.

Louis Vuitton sales, but at the recent shareholders' meeting, Exane BNP Paribas global luxury director Luca Solca expects Louis Vuitton to earn 9 billion 300 million euros last year, while RBC Capital analyst expects 9 billion 100 million euros, which means that the distance between the two companies is about 2 billion 500 million euros, which is equivalent to a distance from a fashion department.

Over the past 2 years, Gucci and LVMH's fashion leather sector's comparative growth tabulation: LADYMAX

Some people say that LVMH boss Bernard Arnault wants to spend his income only if he sees a beautiful brand, which is one of his obsessive-compulsive disorder.

But he did not expect that sneak attack on the defeated brand Gucci 18 years ago has become the most troublesome competitor of Louis Vuitton.

In January 1999, LVMH spent $1 billion 400 million in just 20 days to acquire a 34.4% stake in Italy leather goods producer Gucci group, using regulatory loopholes.

In the face of this situation, Gucci offered to buy LVMH completely, but Bernard Arnault refused, because all acquisitions would cost too much money.

After being rejected by LVMH, the Gucci group decided to expand its shares, selling 42% of the total share capital to 3 billion dollars for French PPR Paris spring group (now renamed Kering of Kai Yun group).

After the expansion, PPR became the largest shareholder of Gucci, while LVMH's share in Gucci was diluted from 34% to 20%.

Moreover, Gucci also reached a strategic agreement with PPR to ensure the independence of Gucci group and continue to develop multi brand strategy.

Handbag clothing has been growing slowly, and perfume has been released again after 70 years. People in the industry have commented that Louis Vuitton launched perfume to stimulate the growth of the company.

Gucci's actions annoyed Bernard Arnault.

He sued the Holland court for investigation.

The court held that Gucci was acting unfairly, but did not decide to cancel the paction between Gucci group and PPR.

LVMH appealed to the Supreme Court of Holland.

After repeated consultations, LVMH finally agreed to pfer the shares of Gucci group to PPR in 2001.

So PPR bought Gucci group at a price of 8 billion US dollars, from one retailer to the third largest luxury group in the world.

When Marco Bizzarri took over the Gucci in January 2015, Gucci earned only 3 billion 500 million euros in 2014, which was the same as the income level of the Prada group. The latter had regressed to about 3 billion due to the lack of innovation, but Gucci doubled.

There is no need to repeat the details about how Gucci can succeed. However, each action of the brand's business brain Marco Bizzarri is enough to arouse LVMH's vigilance. He has won the business leader award in the British Fashion Awards for 2 consecutive years.

Marco Bizzarri has joined the open cloud group for more than 12 years, and its influence is rising. As early as the CEO of Bottega Veneta and Stella McCartney, it has shown excellent business talents.

Especially in 2009, Marco Bizzarri began to become CEO of Bottega Veneta. In the first quarter of next year, Bottega Veneta achieved a strong rebound of 40%. During its term of office, Bottega Veneta grew into a global store of over 210, earning a 1 billion euro club.

{page_break}

Similarly, Marco Bizzarri is also the "revenue magician" of Gucci.

"Today's world is changing so fast that sticking to rules is not an option at all," Marco Bizzarri said at last year's Forum on sustainable development. "We are not perfect, but we are doing our best to achieve our goals."

It also means that Gucci, who is adventurous, has greater ambition. 6 billion 200 million euro is only the starting point of Gucci.

However, LVMH will never sit idly by. It is now the first step to compete against Gucci through a comprehensive layout. In April last year, it suddenly announced that it would buy Dior fashion department with 6 billion 500 million euros to defend its fashion supremacy.

According to the data, LVMH (MC.EPA) sales increased by 10% to 10 billion 850 million euros in the first quarter of March 31st, an organic growth of 13%, exceeding analysts' expectations of 8.5%, mainly due to the rapid growth of its fashion and leather brand business.

During the period, the sales volume of the leather goods department of the group's core rose 25% to 4 billion 270 million euros, and organic revenue grew by 16%.

The growth rate was 15% in the same period last year, but there was no increase in the first quarter of 2016.

Obviously, the group's Dior fashion department bought last year made a great contribution to the growth of sales. Earlier, the analysis of Paris bank pointed out that the growth rate of Louis Vuitton was odd.

What is worth noting is that Kai Yun group is currently doing subtracting, which seems to focus more on luxury goods such as Gucci.

Since the end of last year, Kai Yun group has divested three brands.

In early April, Volcom was divestiture by Kai Yun group.

Earlier, Puma and Stella McCartney were also treated the same way.

Fran ois-Henri Pinault, chief executive of Kai Yun group, said after announcing the Puma divestiture policy, this means that the group will devote itself to the luxury industry in the future and continue to win more market share through bold and continuous innovation.

LVMH suggests that it should stop buying strategy and start to integrate the resources of group brand.

In the first quarter earnings conference, LVMH said it would continue to focus on its brand in the future, while strengthening its control over costs and improving profitability.

Since the beginning of this year, the movement of LVMH to deploy troops has been going on.

From Hedi Slimane to join C line and plan to launch men's wear, to Kim Jones take over Dior men's clothing, Off-White creative director Virgil Abloh takes over the design of the Louis men's wear department, and then to the takeover, and the designers who are famous for their street style style quickly occupy the brand under the banner. The intention behind this is obvious, that is, directly compete with the young people for the market.

Bernard Arnault warned at an earlier shareholders' meeting that Louis Vuitton was not interested in the size of the brand, but that the brand would remain the world's most popular luxury brand in the next 10 years.

Some analysts say that the more consumers like it, the greater the scale, of course. Obviously Bernard Arnault feels the threat of Gucci.

The next two will be fierce competition in the young consumer market.

According to the analysis, if LVMH can not effectively block the pace of Gucci, the number one luxury brand will give way to Gucci in five years, according to the current Gucci quarter average growth rate of 20% over the LVMH fashion leather sector.

But the question is, can Gucci still be that hot? The first quarter earnings report of the upcoming cloud group released in April 24th will be an important indicator.

No doubt, LVMH has tightened nerves.

More interesting reports, please pay attention to the world clothing shoes and hats net.