After a record year in 2005, Gucci chief executive Mark Lee is bullish about 2006. In an interview with Women’s Wear Daily, he said that the company “had the best year in the history of the company, so we are quite proud and happy about thatâ€?. In 2005, Gucci brand’s recurring operating income rose 14.7 percent to €485 million and sales jumped 13.6 percent to €1.81 billion. At constant currency rates, sales would have grown 18 percent.
The brand’s ready-to-wear sales rose 16 percent in the fourth quarter, underscoring the success of creative director Frida Giannini’s cruise collection. However, pressure is on to grow the brand and the ready-to-wear business. Group chief executive Robert Polet has said he wants to double the size of the brand within the next seven years. “There’s a lot of potential for growthâ€? said Lee. “I would really consider that both women’s and men’s ready-to-wear are underdeveloped and under-penetrated and they’ve been growing below the curve of Gucci.â€?
Lee added that the accessories business is growing rapidly. “It is unusual that your biggest categories are growing the fastest,â€? he said. However, he now expects ready-to-wear sales to pick up and said that he is confident in Giannini’s ability to take over designing the men’s wear collection, following her success in men’s accessories.
“The decision I took to put Frida in charge of women’s already a year ago, which, at that point, gave her 95 percent of the brand, was my own statement on (the team approach),â€? said Lee. “I definitely needed to have the women’s ready-to-wear linked to the women’s accessories. She’s quite exceptional. It’s a creative job on the one side and it’s also a big management job. She has 40 people working for her.â€?
Lee said that every major geographic region had realized double-digit sales growth. Sales in Japan rose 11 percent, while in Europe they grew 14 percent. North American sales climbed 24.9 percent, while Asian sales excluding Japan soared 28.5 percent.
In terms of further growth, Lee said that Gucci is opening a new store concept in the luxury Hong Kong mall The Landmark in October. With four floors, the new flagship will be the brand’s biggest store in the Asia-Pacific region. Gucci will also open another three stores in mainland China this year and in November the brand will open a new four-story flagship store in the Ginza shopping district in Tokyo.