Gucci Group is a luxury goods retailer focusing on improving their market share while producing high quality fashionable items. Initially, Gucci’s poor business strategy and internal family conflict directly resulted in decreased sales and net income. When Investcorp took control of the company, Gucci regained their success through quality management and acquisitions. Gucci’s product line now includes a large range of products. We would like to continue Gucci’s success and believe that the next major business decision for Gucci is how to manage the new acquisitions. We recommend that Gucci cease further acquisitions of companies to its portfolio and should not challenge the status quo by making big management changes at the group of companies that it has acquired. This will help sustain growth in different segments and maintain an existing customer base.
Gucci Group’s iconic red and green stripe, as well as their G logo, has been associated with luxury, elegance and glamour since 1923. Once a family owned leather goods store, Gucci has expanded worldwide and increased its product mix to include other luxury goods such as purses and shoes. Gucci’s business operations lacked experienced leadership since family members controlled business decisions. The market for luxury goods had become fiercely competitive and Gucci’s lack of business strategy had caused them to lose market share to their close competitors, Moet Hennessy-Louis Vuitton, Hermes and Prada. Gucci financial status had fallen while their competitors had increased their sales and operating margins (Exhibit 4). In 1993, Investcorp bought the remaining shares of the Gucci family and placed the necessary management personnel to help turn around Gucci’s struggling business. Through a series of acquisitions and business line decisions, Domenico De Sole, President, and Tom Ford, Creative Director, help re-invent Gucci’s brand line and established a firm financial...
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