Textile And Apparel: Brand Clothing Dilemma Inversion Series

Core view

Gucci is the absolute core brand of Kai Yun group. In 1999, the company acquired the equity of Gucci42%, with a shareholding ratio of 100%. In the 2018 fiscal year, sales of Kai Yun group rose 29.4% to 13 billion 665 million euros, while the luxury sector revenue grew by more than 20% in 8 quarters. Gucci sales rose 33.4% to 8 billion 285 million euros over the same period last year, accounting for 63% of the whole group's luxury business income.

According to the company's historical performance and the performance of the two tier market, we can basically divide the development of Gucci brand into four stages: (1) the contention period of share ownership (1999~2004): the predecessor of Kai Yun group, PPR and LVMH compete for Gucci equity, and finally buy the Gucci group at the price of 8 billion US dollars, Tom Ford has been appointed as the creative director of Gucci, and the brand is sexed by the wind. (2) steady development - the downturn period (2005~2013~2015): the initial growth rate of the Gucci brand is basically maintained between the two groups, but sales have fallen off since the 13 year because of the outdated design and the big environment. (3) during the period of strong rise (2016-2017):Alessandro Michele took over the position of brand creative director. Gucci was built into a young fashion brand that combines the retro and the green flavor. The market recognition rate increased rapidly, and the stock price rose more than 3.3 times in two years. (4) robust growth period (2018 ~ present): brand growth has slowed down to double digit growth, and has gradually entered the stage of normalization. Kai Yun group's stock price is currently in a state of shock adjustment.

Gucci the main reasons for this dilemma are: (1) to design younger, reinventing the brand values, and bring back the values of personality that are gorgeous, retro and grotesque. (2) digital marketing is close to young consumers (3) stores are fully reinventing, supply chains are synchronized to upgrade (4), and dig deeper into the Chinese market.

Gucci's dilemma reverses the inspiration for China's high-end fashion brands: (1) stick to mainstream consumer groups and continuously enhance brand values; (2) embrace innovation and change is the rule of survival of fashion Brand Company (3) stable and good corporate governance and management is an important guarantee for sustained growth of brands (4) multi brand and multi category development is the only way for fashion Brand Company to grow bigger and stronger (5) the high-end high-end fashion brands do great job in China's local market.

Investment proposals and investment targets

With the continuous slowing down of domestic economy, domestic consumption shows more and more obvious stratification trend at the present stage. Luxury consumption and parity consumption coexist and flourish, and consumer goods with brand superiority are relatively more stable. In the medium to long term, the Matthew effect of the domestic fashion industry is obvious, with a solid and solid business foundation and obvious core brand advantages. Enterprises that superimpose multi brand and multi category collectivization strategic direction are expected to further enhance the market share in the process of crossing the cycle. We suggest that we pay close attention to the old and high consumption areas such as Lao Fengxiang (600612, buy), Pomme shares (603983, not rated), Shanghai Jahwa (600315, overweight), di Su fashion (603587, buy), and song's (603808, buy) and other companies.

Risk warning

The economic slowdown continues to reduce the pressure on the optional retail terminal, and the impact of fashion trends on the sales of related brands.