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Table of contents1. Gucci's Growth Gear.................................................................................................................................... 1

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Gucci's Growth GearAuthor: Zargani, LuisaPublication info: WWD 205.58 (Mar 21, 2013): 1.ProQuest document link

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Full text: Gucci's Growth GearROME

-- Sitting under the embellished wooden beams of the 16th-century Roman palazzo Alberini that houses the

Gucci headquarters, the brand's president and chief executive officer Patrizio di Marco is brimming with

optimism.

"Gucci's potential has yet to be realized; there is still a long way to go," said di Marco.

Four years into the job, after a comprehensive upgrade of the label, refocusing on heritage and artisanal and

Italian craftsmanship, di Marco has helped boost Gucci sales to 3.64 billion euros, or $4.66 billion, up 60.6

percent from 2.26 billion euros, or $3.14 billion, in 2009, when he joined the brand. Compared with 2011,

revenues last year gained 15.8 percent from 3.14 billion euros, or $4.36 billion.

In 2012, earnings before interest, taxes, depreciation and amortization climbed 17.7 percent to 1.26 billion

euros, or $1.61 billion, compared with 2011. Recurring operating income rose 18.9 percent to 1.12 billion euros,

or $1.43 billion, in 2012, compared with 948 million euros, or $1.32 billion, the previous year and was up 82.2

percent compared with 2009.

Dollar amounts have been converted at average exchange rates for the periods to which they refer.

Looking ahead to the next three years, di Marco said those brands that "know how to talk to their customers will

be the winning ones. This is the real challenge."

As part of the Forever Now project, initiated in 2009, Gucci's "artisan corners" traveled around the world with

company craftsmen showing their production skills. "I'm thinking of regrouping their stories to run on our Web

site," said di Marco, noting the company has held 25 to 30 events a year. The "artisan corners" also helped to

deliver a message di Marco considers fundamental:"Customers increasingly ask for personalized products and

we will continue to emphasize this. The message is that Gucci is big but it still has artisans that create for you

and you alone."

With global expansion, companies are obliged to meet the needs of a wide range of customers, yet at the same

time, local expectations are high. "I don't really like the word 'glocal,' but it is key. We offer a consistent

approach and recognizable offer, but it is differentiated depending on the local situation. Individuality now is thevariable which we need to tackle," di Marco underscored.

In 2012, the Asia Pacific region remained the group's main market, accounting for 37 percent of sales and

gaining 5.5 percent. Western Europe represented 27 percent of revenues, climbing 9.2 percent, followed by

North America, which accounted for 19 percent of sales and increased 13.4 percent. Di Marco said there are

"important market segments in the U.S. -- a beautiful market -- that have matured," he said, before adding,

"[But] we should emphasize who they are as individuals and not part of a group. This transforms the way to

approach them."

Japan accounted for 11 percent of sales and grew 5.3 percent.

All categories showed growth last year. Leather goods accounted for 59 percent of sales, up 15.4 percentcompared with the previous year, remaining the group's core business. Footwear is the second category,

accounting for 13 percent of revenues, up 15.8 percent, followed by ready-to-wear, representing 12 percent,

and up 13.6 percent.

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Gross capital expenditures were up 83.2 percent to 204 million euros, or $261.1 million. This included

investments in the group's retail network, production, logistics, technology and marketing activities and

communication, such as the brand's Forever Now ads featuring Charlotte Casiraghi introduced at the beginning

of March last year. At the end of 2012, Gucci's long-term support of UNICEF, started in 2005, surpassed the

$13 million mark.

As of Dec. 31, Gucci had 429 directly operated stores, which, together with e-commerce, accounted for 75

percent of sales.

The luxury firm is increasingly focused on retail, and is now in talks to shift corners at Holt Renfrew and Neiman

Marcus from wholesale to retail, as it has already done with Saks Fifth Avenue. "They continue to be partners,

it's just a logical consequence for us. The strategy is to control the brand directly; this is the absolute value, the

start and end of the success of any company," said di Marco, who has already inked a joint venture in the

Middle East for the opening of directly operated stores and is negotiating along the same lines with the

company's Russian partners.

While underscoring that "there is a limit to how many stores you can open," preferring to consolidate in some

areas, di Marco said a men's boutique will open in Milan's arty Brera district in June, followed by a men's store

in Paris. The Brera boutique will carry the capsule collection designed by Fiat heir Lapo Elkann. "It's very

beautiful, and it's an interesting project. He is a friend of the house, a person of great taste, so young but

already an icon and he is very intelligent. With [Gucci creative director] Frida [Giannini], they had fun working

together, it's the synthesis of two worlds," said di Marco.

Elkann worked with Giannini on the Fiat 500 by Gucci in 2011. Asked about the location in Milan, slightly

removed from the usual golden shopping triangle off Via Montenapoleone, di Marco conceded Gucci will be sort

of "a pioneer in that area. We have faith that it will have good opportunities."

Speaking a few weeks after the birth of his daughter Greta with Giannini, di Marco was in high spirits and

energetic. He took the time to firmly silence rumors that have been circulating over the past few months about

his potential move to executive roles within Gucci's parent company PPR, with current Bottega Veneta ceoMarco Bizzarri rumored to succeed him.

"This speculation creates uneasiness and confusion, and it has no foundation. I'm concerned about the people

working with us, who feel uncertainty. If I had any interest in fueling this I would say no comment, but there is

nothing to it," di Marco insisted.

He headed Bottega Veneta for eight years before Gucci.

"I am very happy and very proud," he added. "All my career I've been loyal and committed to the project. Four

years at Gucci may seem like many but they are few at the same time. I am motivated and I have a great

relationship with and support from Francois-Henri Pinault [chairman and ceo of PPR]. Of course, it is the

shareholder that decides, but ideally I would want to close my career at Gucci. Where do you go after Gucci?"Credit: DAVIDE MAESTRI;MATTEO PRANDONI;By LUISA ZARGANI

Publication title: WWD

Volume: 205

Issue: 58

First page: 1

Publication year: 2013

Publication date: Mar 21, 2013Year: 2013

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Section: 1

Publisher: Cond Nast Publications, Inc.

Place of publication: New York

Country of publication: United States

Publication subject: Clothing TradeISSN: 01495380

Source type: Trade Journals

Language of publication: English

Document type: News

ProQuest document ID: 1351978486

Document URL: http://search.proquest.com/docview/1351978486?accountid=28962

Copyright: COPYRIGHT (c)2013 FAIRCHILD FASHION GROUP. ALL RIGHTS RESERVED.Last updated: 2013-05-16

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