Open Cloud Growth Hit The Ceiling Once The Red Gucci Is Getting Cold?

Gucci's parent company, Kai Yun group, announced its first half 2019 results yesterday afternoon. The total revenue of the group reached 7 billion 636 million euros, increasing by 15.3% according to the constant exchange rate.

Gucci, the flagship brand of Kai Yun group, has seen a marked slowdown in the first half of this year after three years of rapid growth, with revenue rising 16.3% to 4 billion 617 million euros. Although this data still looks good alone, it is known that Gucci's revenue rose by 44% last year, and Gucci also gained 20% revenue growth in the first quarter of this year.

The weak performance of the group in the US in the first half of the year was mainly due to the decline in Chinese tourists to the United States, which had an impact on Gucci and other brands of Kai Yun. However, the consumption of local luxury goods in China is still strong, and it occupies an absolute advantage in the classification performance of each brand.

According to the earnings report released on that day, Gucci brand contributed more than 62% of the sales of the whole group. Too much reliance on Gucci has always been the biggest worry for investors in the future development of Kai Yun group.

The success of Gucci is largely attributable to the fact that it attracts a large number of young consumer groups in the short term. But this group is also at risk. On the one hand, they are easy to be fed up with the old. On the other hand, because of the lack of a stable economic foundation, it is difficult for them to have continuous purchasing power, so it is also difficult to become the core user of Gucci. And the approach of young people was quickly learned by other competitors.

In order to maintain the growth of Gucci, the brand has also produced some new plans this year. Gucci launched a new perfume series earlier this year. In May, it launched a new beauty series with Coty. Gucci also began to enter the high-end jewellery in large scale. The first boutique jewelry shop opened in the early July at Fang Deng square, Paris.

Kai Yun group is not particularly worried about the slowdown of Gucci. In fact, Group executives have been trying to convince investors that Gucci has just entered a normal development of the brand, and does not mean that Gucci has passed away. "The slowdown in the growth rate of (Gucci) is entirely within expectation." Jean-Marc Duplaix, chief financial officer of Kai Yun, said in a telephone conference on the same day.

With the return to normal Gucci no longer amazing performance, Kai Yun group is also difficult to maintain a large lead in the competition - the world's largest luxury group LVMH, which in the first day of the earnings report, its fashion leather sector sales in the first half of this year rose 21% to 10 billion 425 million euros, has recorded double-digit growth for 11 consecutive quarters, the first half of the Department's revenue exceeded 10 billion euros, a record high, all attributed to the core brand Louis Vuitton and Dior strong growth, innovative marketing skills, increased investment in the electricity supplier, and innovation in product and design, so that they perform well.

In April 3rd of this year, after the official opening of Kai Yun group's sale of the outdoor sports brand Volcom to the brand management company Authentic Brands Group, the group has completed the transformation of pure luxury. Since last year, Kai Yun group has been streamlining its non luxury business, including splitting Puma SE, and selling Stella shares to its designer brand McCartney and Christopher Kane. Surprisingly, Stella McCartney, after more than a year after independence, turned to cooperate with LVMH, the direct rival of Kai Yun.

Other brands of Kai Yun group are still stable, but it is not without threat. Saint Laurent, under the guidance of Anthony Vaccarello, mostly extended the style of Hedi Slimane era. However, it had a positive conflict with Celine, which is now in Celine, which is bound to divert some users.

Alexander McQueen is still short of strong accessories business, and it also needs to launch explosive money in handbags and shoes, because these products are the best way to stimulate repeat purchase.

Balenciaga also needs to find a new growth point after the old man's shoes fade away. However, it seems that Bottega Veneta is showing signs of revival. Over the past three years, sales of Bottega Veneta have been declining, but the decline has eased since the fourth quarter of 2018, and the decline in the first half of this year has dropped to only 3.8%. This is due to the brand renovation plan of the new creative director. It is expected that sales of Bottega Veneta will start to recover from the second half of 2019.

After the announcement of the earnings report, the price of the open cloud closed down 2.04%, and the trading price dropped 9% after the event.