Investors are eagerly anticipating Kering’s full-year earnings report, focusing on the impact of Gucci’s new creative director, Sabato de Sarno, on the luxury brand’s financial performance. Gucci, lagging behind rivals like Louis Vuitton and Dior, appointed the relatively unknown 40-year-old Italian designer last year to steer a new artistic direction.
De Sarno’s runway shows in September and January showcased a shift towards more polished and toned-down styles. The buzz around his designs gained momentum when singer Miley Cyrus donned a shimmering Gucci gown at the Grammy Awards. However, the real test lies in the financial figures, as De Sarno’s looks only recently hit stores.
Gucci constitutes a significant portion of Kering’s operating profit and sales, making it a pivotal focus for investors. The brand overhaul, emphasizing upmarket positioning and classic styles, precedes the financial report. Analysts are keen to decipher clues about the potential success of Gucci’s transformation in the outlook provided by Kering executives.
Although De Sarno’s impact may not be fully reflected in the financials, analysts remain cautious about expecting a significant improvement. The post-pandemic rebound in the fashion sector has faced challenges, with rising prices affecting consumer demand, especially for less wealthy shoppers.
De Sarno’s approach, described as “bon chic, bon genre” (preppy or posh) by Bernstein analysts, emphasizes a more commercial and down-to-earth style. The designer remains unfazed by criticism, stating, “I’m doing what I like, and if what I like is a commercial thing, fine.” Analysts hope for more originality, pointing to Gucci’s historical success under previous designers like Tom Ford.
As the fashion industry awaits Kering’s financial report, the spotlight is on whether Gucci’s bold makeover under Sabato de Sarno can rejuvenate the iconic brand’s fortunes in a shifting luxury landscape.
