Gucci is declining rapidly | Business | Sarthak Ahuja

Here’s a luxury brand that is fast declining into mediocrity and seems like there aren’t as many takers...
Its sales have toppled by ~20% in Asia last year, which is almost like a cliff fall because Asia’s the fastest growing market for most luxury brands of the world...
The brand was once so aspirational that it was said that it should be in a museum and not in a mall...
Though it seems like the saying will come true for other reasons.
I’m talking about Gucci... and I’ll tell you why this seems to be happening...
The brand is owned by Kering, one of the largest fashion conglomerates of the world... which also houses brands such as Balenciaga, YSL and Bottega Veneta.
But let’s compare the performance of Kering to its closest competitor... LVMH.
LVMH has a far larger portfolio compared to Kering... with LV, Dior, Loro Piana, Fendi and a whole bunch of other brands rising much more rapidly...
Such that LVMH is today worth 10X the size of Kering at ~350 Bn Euros.
Further, LVMH enjoys a valuation of 23 PE, while Kering gets only 13...
Management troubles and creative differences aside, we know LVMH’s founder Bernard Arnault keeps juggling in the first three spots of the richest folks in the world right now...
And this access to wealth and money gives LVMH more power to acquire more brands that are relevant today, spend more on branding and take a more long term view.
And capital is such a big moat in the fashion conglomerate business that today, Kering’s ~50% sales and ~65% profit comes from just one brand, Gucci... while LVMH is much more diversified.
So a blow to Gucci has the ability to bring the whole company down!
And we see this playing across industries in the world today... fashion, FMCG, retail, tech...
The biggest moat has become capital... Look at the companies building AI models... all capital rich.
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A Chartered Accountant with about 10 years of experience in areas of Tax Advisory, Startup Consulting, Fundraising, Audits, Deal Advisory, Business Modelling and contract CFO services.
Winner of the ISB Young Leader Award 2017 and the Best All Rounder, PGP Class of '17, Sarthak has also been published about in the leading financial newspapers such as The Financial Express as possibly the youngest Indian to have completed the courses of CA, CS and CMA along with a graduate degree in Financial & Investment Analysis from University of Delhi, all by the age of 23 years.

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As an Indian company, Is it a good segment to enter in ?