Gucci is owned by the French holding Kering, which completed its buyout of Gucci in an $8.8 billion deal in 2004. Artémis is the investment company of the Pinault family. Founded in 1992 by François Pinault, Artémis is the leading shareholder in Kering, which owns Gucci. The Kering Group generated over €20 billion in revenue in 2022, and Gucci was the leading brand, with revenue of €10.5 billion.
| Aspect | Description | Analysis | Examples |
|---|---|---|---|
| Products and Services | Gucci offers a wide range of luxury products, including apparel, handbags, footwear, accessories, eyewear, fragrances, and home decor items. The brand also provides made-to-order services, customization options, and limited-edition collections. Gucci’s products are renowned for their craftsmanship, quality, and distinctive designs. | Gucci’s core offerings are luxury fashion and accessories, reflecting the brand’s commitment to craftsmanship and unique designs. The brand’s customization and limited-edition collections cater to exclusivity and personalized luxury. Gucci’s reputation for high-quality products attracts discerning consumers. | Luxury apparel, handbags, footwear, accessories, eyewear, fragrances, home decor, made-to-order services, customization, limited-edition collections, craftsmanship, unique designs, high-quality products, exclusivity. |
| Revenue Streams | Gucci generates revenue primarily through the sale of its luxury products. This includes revenue from the sale of clothing, accessories, fragrances, and other merchandise through its own boutiques, department stores, online platforms, and exclusive collaborations. The brand also earns from licensing agreements for its brand name and logo on various products. | The primary revenue stream for Gucci comes from the sale of its luxury products through a wide range of distribution channels. Collaborations and licensing agreements contribute to additional revenue. The brand’s exclusivity and desirability contribute to strong sales revenue. | Revenue from product sales, luxury apparel, accessories, fragrances, department stores, boutiques, online platforms, collaborations, licensing agreements, diversified revenue sources. |
| Customer Segments | Gucci serves a high-end, luxury consumer base consisting of affluent individuals, celebrities, fashion enthusiasts, and those seeking prestige and exclusivity. The brand’s products cater to consumers with a taste for high fashion and a desire for luxury experiences. | Gucci’s customer segments primarily comprise affluent individuals, celebrities, fashion enthusiasts, and those seeking prestige and exclusivity. The brand’s products appeal to those who appreciate high fashion and are willing to invest in luxury items. Gucci’s exclusivity is a key selling point. | Affluent individuals, celebrities, fashion enthusiasts, prestige seekers, luxury products, high fashion, exclusivity, exclusive customer base. |
| Distribution Channels | Gucci distributes its products through a variety of channels, including its own boutiques, department stores, luxury retailers, e-commerce websites, and exclusive collaborations with other brands and designers. Gucci’s boutiques and online presence are crucial for maintaining brand image and accessibility. | Distribution channels for Gucci encompass its network of boutiques, luxury department stores, high-end retailers, e-commerce platforms, and exclusive collaborations. Boutiques and online presence contribute to brand image and accessibility. Collaborations expand reach and exclusivity. | Boutiques, department stores, luxury retailers, e-commerce platforms, exclusive collaborations, brand image, accessibility, reach, exclusivity. |
| Key Partnerships | Gucci forms collaborations with other luxury brands, designers, and artists to create exclusive product lines and limited-edition collections. The brand also collaborates with department stores and high-end retailers for distribution. Additionally, Gucci partners with celebrities and influencers for marketing campaigns and endorsements. | Collaborations with luxury brands, designers, artists, and retailers enhance Gucci’s exclusivity and expand its product offerings. Partnerships with celebrities and influencers promote the brand’s image and products. These collaborations are integral to Gucci’s marketing strategy. | Luxury brand collaborations, designer partnerships, artist collaborations, retailer partnerships, celebrity and influencer endorsements, exclusivity, expanded product offerings, marketing strategy. |
| Key Resources | Key resources for Gucci include its design and creative teams, manufacturing facilities, supply chain management, marketing and branding efforts, distribution network, flagship boutiques, and brand reputation. The brand’s heritage and iconic design elements are crucial assets. | Gucci’s resources encompass its design and creative talent, manufacturing capabilities, supply chain expertise, marketing and branding strategies, extensive distribution network, flagship boutiques in prominent locations, and a well-established brand reputation. The brand’s heritage and iconic elements are integral to its identity and appeal. | Design and creative teams, manufacturing facilities, supply chain expertise, marketing and branding strategies, distribution network, flagship boutiques, brand reputation, heritage, iconic design elements, identity, consumer appeal. |
| Cost Structure | Gucci incurs various costs related to its operations, including expenses for materials and production, marketing and advertising campaigns, employee salaries and benefits, research and development efforts, rent and maintenance for flagship boutiques, and administrative overhead. High-quality materials and marketing costs are significant expenses. | Costs associated with Gucci’s operations include expenses for materials, production, marketing and advertising campaigns, employee salaries and benefits, research and development investments, rent and maintenance of flagship boutiques, and administrative overhead. The use of high-quality materials and extensive marketing contribute to substantial operational costs. | Materials and production costs, marketing and advertising expenses, employee salaries and benefits, research and development investments, flagship boutique rent and maintenance costs, administrative overhead, substantial materials and marketing expenses. |
| Competitive Advantage | Gucci’s competitive advantage is rooted in its reputation for luxury, iconic design elements, exclusivity, and strong brand recognition. Collaborations with other luxury brands and designers enhance its appeal. The brand’s ability to set fashion trends and maintain a timeless yet contemporary image contributes to its competitiveness. | Gucci’s strengths include a reputation for luxury and exclusivity, iconic design elements, brand recognition, and collaborations that expand its product offerings and reach. The brand’s influence on fashion trends and its ability to balance tradition with contemporary style are key factors in its competitive position. | Reputation for luxury, exclusivity, iconic design, brand recognition, collaborations, expanded product offerings, influence on fashion trends, balance of tradition and contemporary style, competitiveness in the luxury fashion market. |
Gucci origin story
Gucci is a luxury fashion house based in Florence, Italy, which sells products such as footwear, perfumes, makeup, ready-to-wear, and home décor.
Gucci was founded in 1921 by Guccio Gucci, with their son Aldo Gucci responsible for making the family-owned company a brand recognized worldwide.
The first American store was opened in New York City in 1953, with showrooms then opened in London, Paris, and Florida over the next decade.
As of December 2021, Gucci operated 501 stores worldwide with estimated global revenue totaling €9.73 billion.
The company also celebrated 100 years in business in 2021 with new collections based on its most celebrated designs.
The Luxury Wars!
On March 1995, as Maurizio Gucci crossed the road to reach his office in the center of Milan, a man with a tight grip on his gunshot him dead!
That was the epitome of the Gucci wars.
A decade of family feuds had turned Gucci from one of the most iconic brands in the world to one of the most talked about, not for its fashion products, but for its family fights.
Eventually, the story got even crazier as investigators discovered that his former wife, Patrizia Reggiani, had commissioned the homicide.
Yet, in parallel to it, as the Gucci family lost control of its empire in the mid-90s, another business war was going on!
In the late 1990s, the luxury industry consolidated in a set of wars that would eventually converge into a luxury empire that, in 2022, churned the wealthiest man on earth: LVMH, led by Bernard Arnault.
It all started with the attempt to take over Gucci by Prada’s CEO Patrizio Bertelli, which, in 1998-9, had acquired a good chunk of Gucci, apparently as an attempt to seal a strategic partnership with the company.
In previous years, Gucci had gone through internal battles to control the company.
First, the litigious Gucci family had faced many legal battles for the company’s takeover.
Eventually, this led to the ousting of most of the company and the successful attempt of Maurizio Gucci (the son of Rodolfo, one of the second generations of the Gucci family).
Indeed, for some context, Gucci was founded in the 1920s by Guccio Gucci, which successfully transformed the company into one of the more renowned Italian fashion boutiques.
Yet, Guccio’s sons, Aldo, Rodolfo, and Vasco, primarily transformed the business.
Aldo led the international expansion of Gucci, which transformed it into one of the most renowned fashion houses of the 1970s.
In contrast, Rodolfo and Vasco led the creative and industrial side back in Italy.
The second generation of Gucci was highly successful in building Gucci into one of the most successful fashion brands in the world.
Gucci was the first Italian company to successfully expand in the US, to become a brand comparable to other French fashion brands, and it managed to IPO back in 1995.
Yet, Gucci also set the stage for a family feud, made of legal battles, that would make it into the most talked about until the 1990s.
Finally, after internal wars that lasted for years, Maurizio Gucci, son of Rodolfo, managed to take over control of the company, thanks to the partnership with Investcorp. This investment fund had put its eyes on Gucci.
As Maurizio Gucci took control of Gucci, he tried to rebuild the brand by re-organizing it around the core product lines.
Yet, after 2-3 years of unsuccessful attempts, Investcorp played its cards and ousted Maurizio Gucci.
As the last Gucci was ousted from the company’s management and ownership, the company was led by Domenico De Sole, an Italian-born, US-adopted lawyer, who had grown into Gucci, from Maurizio Gucci’s father’s loyal lawyer to the company’s CEO.
At the same time, Gucci reorganized its management.
Tom Ford, a young designer, finally became the head of the company’s creative side (Tom Ford would sell his own brand to Estée Lauder, in 2022, for $2.8 billion!).
The duo De Sole-Ford (they are still partners today, and De Sole also helped sell Ford’s company to Estée Lauder in 2022) would go on to create one of the most successful business turnarounds of the last decades.
Gucci went from losing a ton of money in the mid-90s to a highly profitable company at the turn of the century.
By the late 1990s, thus, Gucci had become an interesting target for other brands, primarily Prada, who started the bidding wars.
Indeed, as Bertelli, Prada’s CEO (the guy that had married Miuccia Prada and had turned a creative company into a fashion empire), had bought a substantial chunk of shares from Gucci, he tried to build a strategic partnership with the company.
Yet, now run by Domenico De Sole and Tom Ford, Gucci didn’t want to deal with Bertelli or lead a merger between the two companies.
This opened the way for another company that would try all it could to conquer Gucci: LVMH.
At the time, LVHM had already become a luxury empire thanks to the incredible business acumen of Bernard Arnault.
Arnault started his career by channeling the resources from the family real estate business toward iconic French brands.
By the late 1990s, LVMH had become the first multi-brand fashion house.
In 1998-9, the luxury industry lived a strange moment. As we saw back then, Patrizio Bertelli (Prada’s CEO) seemed to have foreseen the future.
After he had acquired a good chunk of Gucci shares, which resembled an unusual move, he tried a takeover, which would be almost impossible for the time.
Indeed, while Gucci was a rival of Prada, Prada was smaller than Gucci.
While Bertelli’s reasoning might have also been driven by the fear of Gucci entering into agreements with some of Prada’s artisans in the Scandicci region in Italy, Bertelli backed down when Bernard Arnault came in.
As we saw, the paradox is that Prada was smaller than Gucci at the time and didn’t have the financial resources to take over the company.
So eventually, Prada sold its stake to LVMH for an incredible financial gain.
While Arnauld initially claimed his takeover of Google was a friendly one, it came out almost immediately that he was only trying to get more and more control of the company to finally make Gucci one of the brands under the control of LVMH.
Indeed, Arnauld’s tactics were well-known at that point.
He managed to gain control of many valuable fashion brands and reunite the brand’s LV and MH under the same umbrella by playing the owners of those two brands against each other while he took control of their group!
Yet, under Domenico De Sole and Tom Ford, Gucci didn’t like the idea of being taken over by LVMH to become one of the brands under Arnauld’s control!
Thus, the war ensued.
In an incredible deal of the last moment, Gucci found a white knight, into another French billionaire, François-Henri Pinault.
Pinault understood the time window to consolidate in the fashion industry was right.
He convinced De Sole and Tom Ford to close a deal with him by making Gucci the central business unit in charge of developing a multi-brand strategy for PPR (which would eventually become Kering)!
LVMH, which had amassed a substantial stake in Gucci, was diluted as Gucci issued stocks in favor of Pinault, thus making Arnauld slowly back up from the deal.
That was the beginning of the fight between two groups that would eventually dominate the whole luxury fashion industry: LVMH (controlling brands like Christian Dior, Fendi, Givenchy, Marc Jacobs, Stella McCartney, Loewe, Loro Piana, Bulgari, and Tiffany & Co) and Kering (controlling brands like Gucci, Saint Laurent, Bottega Veneta, Balenciaga, Alexander McQueen)!
Gucci ownership structure
When Guccio Gucci passed away in 1953, three of his five sons received shares in the company – Aldo, Rodolfo, and Vasco.
When Vasco passed away in 1974 and Rodolfo in 1983, Gucci was owned by surviving brother Aldo and Rodolfo’s son Maurizio.
In the 1980s, Maurizio and Aldo Gucci became involved in protracted battles over who would assume majority ownership of the company.
Maurizio ultimately took control of Gucci after Rodolfo was sentenced to a year in prison for tax evasion.
In 1988 with the company in financial difficulty, he sold approximately 48% of Gucci to Bahrain-based investment firm and Tiffany owner Investcorp.
The rest of Gucci was sold to Investcorp in a 1993 deal with around $200 million.
Under new leadership in the late 1990s, Gucci’s reversal in fortunes saw Prada take a 9.5% stake.
Bernard Arnault, chief of luxury conglomerate LVMH, also accumulated a sizeable holding of 34% and then acquired Prada’s stake before an unsuccessful takeover bid.
To escape LVMH’s control, Gucci reached out to French financier François Pinault and his multinational corporation Pinault Printemps Redoute – now known as Kering.
The corporation purchased a 44% stake in Gucci in 1999, diluting LVMH’s controlling interest in the process.
The deal resulted in a long and expensive court battle between Kering and LVMH as both companies tried to wrestle control of Gucci.
Kering would prove to be the victors of this battle and completed their buyout of Gucci in an $8.8 billion deal in 2004.
Gucci after the Kering acquisition
Within Kering today, Gucci is the most important brand, both from an iconic standpoint and a revenue standpoint!
After acquiring it, how did Kering manage Gucci in the late 1990s?
Strategic investment agreement
Pinault-Printemps-Redoute (PPR) purchased a 40% equity stake in the Gucci Group for $3 billion in 1999. The move was based on the advice of Morgan Stanley, who suggested a second capital increase by contribution in kind to dilute LVMH’s stake from 34.4% to 20.6%.
Based on a belief that it needed to protect itself from an “inappropriate shareholder who acquires a dominant or significant degree of power”, LVMH appealed to cancel the capital increase. However, the Enterprise Chamber of the Amsterdam Court of Appeal ruled in PPR’s favor.
Nevertheless, as part of the deal, PPR entered into a strategic investment agreement (SIA) with Gucci where it agreed not to increase its stake in the company for a period of five years. LVMH appealed once more, and the SIA was amended in September 2001.
PPR increases its stake
In essence, the 2001 amendment involved a share repurchase agreement that would resolve the conflict between the parties in three stages:
- PPR would acquire 8.6% of Gucci from LVMH at a premium of $94 per share.
- A special dividend of $7 would be paid to Gucci and its shareholders (except PPR), and
- PPR would launch a PTB for Gucci minority shareholders (including LVMH) for $101.50 per share to acquire the balance of Gucci’s capital.
On December 17, 2001, LVMH sold its remaining Gucci shares (amounting to 11.5%) to completely divest itself. The SIA was amended again to allow PPR to hold no more than 70% of Gucci during the five-year standstill period.
In 2004, PPR attained a 99.23% stake in Gucci for close to $9 billion with only a few minority shareholders remaining.
De Sole and Ford resign
While PPR was increasing its stake in Gucci, De Sole and Ford spent billions on the acquisitions of brands such as Yves Saint Laurent, Bottega Veneta, Alexander McQueen, Balenciaga, Stella McCartney, Boucheron, and Bedat.
But tensions soon mounted after the pair failed to strike a deal with Gucci’s new owner over managerial, financial, and creative independence. De Sole and Ford left Gucci in 2004, but the company was in good hands from a creative standpoint.
Prior to his departure, Ford had hired Fendi designer Frida Giannini to bolster the company’s accessories department. Giannini worked briefly as Creative Director of accessories and then started to manage the design of both men’s and women’s ready-to-wear in 2006.
Change of direction
In her role, Giannini eschewed Gucci’s double-G monogram in favor of house classics such as the floral motif. This proved to be an instant commercial success and later, became the impetus for a heritage movement within the wider fashion industry.
Gucci then aired its first-ever TV ad in 2008. Directed by American filmmaker David Lynch, the ad featured Hollywood actor James Franco and promoted Gucci’s first men’s perfume, Gucci Pour Homme.
In 2009, former Bottega Veneta head Patrizio di Marco became the new CEO. Giannini and de Marco became partners in business and in life and emphasized Gucci’s Italian craftsmanship, jet-set lifestyle, and archival iconography.
Both departed the company in 2014 after a slump in sales.
Marco Bizzarri
Di Marco was replaced by another former Bottega Veneta CEO in Marco Bizzarri. In early 2015, Bizzarri famously appointed little-known Alessandro Michele as creative director to reverse the company’s fortunes once more.
Many were surprised by the appointment, but Michele was part of a team that designed a new menswear collection in less than a week. His first collection for women debuted about a month later in Milan, and both were an instant success.
In the years that followed, Michele reintroduced the double-G monogram as the core design element of Gucci products as well as various new innovative products.
In the process, he attracted a new crowd of younger customers to ensure Gucci remained profitable and a leader in fashion for the foreseeable future.
Key takeaways:
- Gucci is a luxury fashion house based in Florence, Italy, which sells products such as footwear, perfumes, makeup, ready-to-wear, and home décor. Gucci was founded in 1921 by Guccio Gucci, with their son Aldo Gucci responsible for making the family-owned company a brand recognized worldwide.
- Gucci was family-owned until 1988, when financial difficulties caused the company to be sold to Bahrain-based investment firm Investcorp. Gucci was then progressively sold off to LVMH, who initiated an unsuccessful takeover bid.
- French multinational Pinault Printemps Redoute took a controlling stake in Gucci to arrest control from LVMH, which resulted in a long court battle that it would ultimately win. The multinational, now known as Kering, completed its purchase of Gucci in 2004.
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