Where is Gucci's cachet?Friday, 01 August 2008
Gucci may be losing its cool. According to Agencies, the London-based Interbrand consulting company stated "the return of profit momentum doesn't necessarily mean a revival in the label's cachet."
Gucci may have doubled its sales since 2004, however experts say the brand is becoming more mainstream and risking its high-end credentials.
Interbrand stated that during economic uncertainty to push for higher sales compromises the brand's luxury position - something its rivals at Louis Vuitton have been careful to avoid. It's recent introduction of a lower-end bag, amicably priced at EUR 350, resembles more a market stall bag than a luxurious, aspirational designer piece.
With the slowdown in US consumption, Gucci's flaws are beginning to show. Gucci owner PPR sees is as its strongest brand, with Gucci accounting for approximately 36 per cent of its operating profit. Aalysts,however, estimate a 4 percent increase in PPR's 2008 earnings per share, compared with estimates of a 7 percent rise at LVMH, based on data compiled by Bloomberg.
Gucci Group NV Chief Executive Officer Robert Polet aims to double the brand's revenue to 3 billion euros by 2011.