NEWS STORY
Gucci
eyes ambitious global-expansion plan
Gucci Group aims to more than double
the number of Yves Saint Laurent (YSL) stores within two years as the No 3
luxury-goods maker terminates nearly all the 150 YSL licences, mostly by
the end of the year, and looks to sell on-line.
The new owner of the Paris fashion house wants outlets
in Japan and the United States, and is looking at Beverly Hills and San
Francisco, said chief executive Domenico de Sole.
There are 25 stores now, mostly in Europe, and just one
in the US.
"Everything was licensed, there was little control
of the YSL product," Mr de Sole said.
"We're going to terminate the licences as they come
up for renewal. As a result, royalty fees will go down and revenue will
fall, so we'll have to vamp up the stores."
After buying YSL and the Italian shoemaker Sergio Rossi
last year, Gucci has about US$2.4 billion for purchases as it seeks to
build itself into a multi-brand group. Gucci is also following rivals,
notably France's LVMH Moet Hennessy Louis Vuitton, in examining the best
way to sell its branded wares on-line.
"Internet is going to be an important and
legitimate way of doing business," said Mr de Sole.
"There are lots of issues: exclusivity of the
product, pricing, proper delivery. An important part of the Internet is
how these products are sold but at some point, it will happen."
Gucci could sell watches, perfumes and small leather
goods over the Internet, although Mr de Sole would not specify a time
frame.
"YSL is profitable because of royalty fees but
that's not the kind of income we're interested in," he said.
YSL is expected to be earnings enhancing for Gucci from
2002. The YSL licences accounted for almost two thirds of the division's
$88 million in revenue last year.
Gucci has already purchased C. Mendes, the licensed
maker of YSL women's ready-to-wear that owned 11 YSL stores. Gucci eyewear
will continue to be made by Safilo.
"We are using our people at Gucci America to open
the store network for YSL and Sergio Rossi," said Mr de Sole.
The only US store is on New York's Madison Avenue.
"Gucci America is looking to open stores for YSL
and Sergio Rossi Gucci Japan is doing the same for Sergio Rossi and YSL in
Japan. The same goes for Hong Kong," he added.
Gucci's fragrances are licensed to Wella, the world's
second-largest maker of hair-care products.
Mr de Sole said the company would look into whether
Gucci would consider buying back the perfume licence or forming a joint
venture to exert more control over the perfumes.
The company has been reorganising YSL fashions and
Sanofi Beaute fragrances, acquired in the fourth quarter of last year.
Sanofi Beaute aims for operating margins of 8 per cent this year, up from
5.6 per cent last year, Mr de Sole said.
Last week, Gucci named Chantal Roos, former president
and chief executive officer of Beaute Prestige International to run Sanofi
Beaute perfumes and cosmetics.
"We expect the company to grow dramatically as we
reposition the YSL brand," Mr de Sole said of Sanofi Beaute.
"The same thing happened to Gucci. We couldn't give Gucci fragrances
away but as we repositioned Gucci as a brand, the fragrance has become
very successful and our hope is to do exactly the same thing with YSL."
After a fashion: Domenico
de Sole, president and chief executive officer of Gucci, wants to open
more YSL luxury boutiques in San Francisco, Los Angeles, Japan and Hong
Kong.
SCMP
BLOOMBERG
in London
