Specialist
Commercial Director at LVMH Fashion
Agenda
- Gucci’s 2021-22 top-line growth outlook in China and the rest of Asia – product attractiveness and pricing strategy vs peers, including the Aria collection launch’s impact
- ASP and UPT [units per transaction] trends in light of Aria collection launch
- Online channel’s importance, highlighting growth across WeChat (HKG: 0700), dot-com and third party platforms
- Operating margin outlook for the region
- Kering’s (PAR: KER) diversification requirements to support growth, highlighting M&A outlook
Questions
1.
Could you outline trading levels in mainland China for August, September and early October 2021? How have they fared vs 2020 and 2019? We heard about a challenging period in August, perhaps at least for Gucci, but the company also noticed a softer trading market.
2.
What’s the risk of wallet share shifting away from luxury spend in China as the economy opens up and the pandemic eases?
3.
What are your 2022 expectations for luxury consumption? What is your 2022 growth outlook in mainland China for the luxury apparel sector?
4.
How might the common prosperity policy’s introduction impact top line in mainland China?
5.
Gucci underperformed vs expectations, particularly in Q3 2021. Why do you think the brand is underperforming in China? What are your global thoughts?
6.
What are the challenges around Gucci’s strategy outside of leather goods?What are the challenges around Gucci’s strategy outside of leather goods?
7.
How can Gucci change momentum or revitalise the brand?
8.
What are the early customer interest indicators across product segments for the Aria collection?
9.
What might the Aria collection mean for Gucci’s sales uplift? You mentioned 10%, but how do you expect Q4 2021 sales to trend YoY?
10.
How might the Aria collection impact Gucci’s ASP? We’re hearing it could improve ASP and average basket value.
11.
Why has Gucci historically had a lower UPT [units per transaction]?
12.
What opportunities are there to improve Gucci’s ASP outside of the Aria collection? How much higher could prices become?
13.
What is the expected performance of Gucci’s online channel in China, as the economy is reopening but there are increased restrictions in the country due to coronavirus outbreaks?
14.
Which channel within China’s e-commerce market is the biggest sales driver? What’s the rough split between dot-com and third party, or which is more relevant?
15.
What’s your outlook for operating margins, based on the global demand environment? Gucci was approaching 41% operating margin pre-coronavirus. How long will it take to return to that level, if ever, and what’s your short-term outlook?
16.
What marketing spend is required to drive or reinvigorate sales, relative to revenue?
17.
How long could it take for operating margins to return to the 40% range?
18.
More so than ever, there’s a focus on the Kering group needing to diversify away from Gucci, given the challenges within the brand. This highlights the M&A strategy within the group. How can Kering approach this with M&A? What market opportunities are there for the group to diversify?
19.
What opportunities are there for Kering to pick up hard luxury brands?
20.
A few final questions to clarify some earlier answers. Where is the WeChat inventory sourced from? Is it from buyers or Gucci?
21.
You mentioned a repatriation in luxury spend, so customers shopping more in China vs internationally. You said it wasn’t fully repatriated, but it could advance in 2022-23. Why do you think that is?
