Translated by
Nicola Mira
Feb 20, 2017
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Kering sets out to relaunch Bottega Veneta

Translated by
Nicola Mira
Feb 20, 2017

Until recently Bottega Veneta was regarded as the gem in the Kering luxury group's portfolio, but in 2016 the Italian label suffered a slump in sales (-8.7%), down to €1.173 billion, and lost its second place in the Kering brand ranking behind Gucci, overtaken by Saint Laurent. The Venetian label, led since last October by the former Hugo Boss CEO, Claus-Dietrich Lars, also suffered a decline in profitability, as its current operating income fell by 20.6% compared to 2015, down to €297.4 million, while its margin lost 380 base points, down to 25.3%.

Bottega Veneta, Spring/Summer 2017 - © PixelFormula

Since last year, several measures to get the label back on track were put in place, but they have so far failed to deliver the expected results. "We have a diversified brand portfolio, whose record sales were driven last year by Gucci and Saint Laurent, and [this] allows us to relaunch Bottega Veneta comfortably," said Kering's CEO François-Henri Pinault at the presentation of the group's annual results.

"Growth starting from the second half of the year is possible, but it is not an imperative. For the time being, we are working on bolstering the label's mainstays, it is important to give [Bottega Veneta] what it needs to get back on a constant growth path," added the group's CFO, Jean-Marc Duplaix.

The Italian label was bought by Kering in 2001, and in 2015 it topped the €1 billion revenue mark. "Between 2005 and 2015, Bottega Veneta recorded an average growth of 23% per year, and a 39% one in its operating income. Its return on invested capital still remains the highest among all our brands," said Jean-Marc Duplaix. "It is a very dynamic label, whose potential must be exploited by degrees." Last year Bottega Veneta was penalised by its very high price positioning and its marked reliance on Asian customers (sales in Asia accounted for 40% of its total revenue), as well as by a range weak on diversification and by the perception of a lack of creative rejuvenation.
However, for the time being there is no question of a change in creative director. François-Henri Pinault has recently confirmed his confidence in Tomas Maier, who has been at the label's helm for fifteen years. Maier will showcase his new men's and women's collections on 25th February in Milan.

"Tomas Maier's creative skills in leather goods are matchless. The problem is that not enough has been made of this asset. Bottega Veneta now needs to go out and seek new customers, young consumers especially, and this will require a different, more open communication style," said Pinault.

Tomas Maier at Bottega Veneta's latest runway show - © PixelFormula

Greater emphasis will therefore be placed on digital tools, which will enjoy a 40% slice of the communications budget this year. "At this time of consolidation, we want to strengthen Bottega Veneta's values and its exceptional brand image, while also emphasizing its exclusivity," said Jean-Marc Duplaix.

The label's image has indeed suffered due to its wholesale distribution, which has been reorganised in order to raise its level of quality. Some orders were cut to minimise the risk of saturation. While the wholesale channel lost 12.9%, sales through the label's own store network, accounting for 81.8% of the brand's business, lost 8.7%, with peaks of -16.7% in western Europe, -17.4% in like-for-like terms in the USA, and -15% in Japan. Emerging countries instead grew by 3.1%, chiefly thanks to Asia.

To win back the US market, the label is already planning the opening of a new flagship store on New York's Madison Avenue. There is work in progress also for the product mix, as the balance between permanent collections and novelty items is under review. Leather accessories will receive an energy boost: they are the label's driving force, accounting for 86.1% of total sales, and will feature new categories, among them the fast-expanding shoe collection, and a revamping of the long-standing lines.

Notably, the label's signature plaited-leather handbags, using the renowned 'intrecciato' technique, will be upgraded and redesigned.

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