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A CULTURE F PURPOSE


FROM THE CEO 3 CHANGE MAKING AND BRIDGING DIVIDES 4 NO LONGER MODERN 5–6 CHIME FOR CHANGE 7–8 FOSTERING INNOVATION 9 REAPING THE BENEFITS 10–11 PROGRESSIVE PERFORMANCE BREEDS PURPOSE AND VALUE 12 THE FACES FUELING OUR SUCCESS 13 THE HISTORY 14 THE MEANING BEHIND IT ALL 15

TABLE OF

CONTENTS


from the

CEO

The time is now. Gucci’s next year, and years to follow, are dedicated to catalyzing change in the industry and building a responsible, progressive and sustainable business. This year, I selected a new creative director. I wanted to find someone who shared a belief in the importance of the same values. I sensed that immediately on meeting Alessandro for the first time. Together, by committing to a culture of purpose, taking responsibility and encouraging respect, inclusivity and empowerment, we want to create the necessary conditions for a progressive approach to sustainability. I am extremely proud to announce our brand’s new ten-year Culture of Purpose sustainability plan. It is through the implementation of this plan that Gucci is undoubtedly committed to a culture of purpose by putting environmental and social impact at the heart of the brand.

To a better future,

Marco Bizzarri{ Marco Bizzarri, CEO

years


Together we are committed Influential, innovative and progressive, Gucci is reinventing a wholly modern approach to fashion and business.

to raising aware a culture of resp the Gucci system

The promotion, protection and improvement of the quality of life and the socio-economic development of local, national and international communities are part of our business ethics. Each year, Gucci contributes to a variety of projects aimed at safeguarding women’s rights, supporting the arts, protecting children and promoting health. Gucci is working to strengthen its current commitment to be a progressive leader. This pathway involves the enhancement of key issues such as respect for human rights and employees, the environment and biodiversity, respect for stakeholders and the involvement of suppliers.

FUR FREE ALLIANCE COMMITMENT 4


UNICEFʼS GIRLSʼ EMPOWERMENT INITIATIVE

areness & creating esponsiveness within tem. The 10 Year Plan & Its 3 Main Pillars environment Gucci believes that the commitment to fighting against climate change is not only essential for safeguarding the planet, but is also essential to ensuring competitiveness. We are setting ambitious targets to create a new standard in luxury retail. For example, one of our main goals is to continually guarantee the traceability of 95% of our raw materials.

humanity Gucci recognizes the value of its employees and is dedicated to enhancing the lives of the people who make our products as well as supporting communities­. For example, this involves responsible and innovative management of the supply chain, gender equality, diversity and inclusion.

new models Gucci is developing new solutions by applying technical innovation to improve efficiency in its production and logistics. For example, setting up an incubator and start-up environment to foster innovation within the company.

5


NO LONG E In an industry

that raises & kills more than 75 billion wild animals every year, it is our inherent duty as an influential business to take responsibility and set a sustainable and cruelty-free model for other businesses in the fashion industry to follow. There is a growing segment of new, ethically-minded consumers who care about innovation and social responsibility and want nothing to do with outdated and inherently cruel products, like fur. At Gucci, we understand this and will absolutely reap the benefits as a result. Respect for animals is becoming more entrenched in people’s values and as a great brand in the fashion industry, our competitors are taking our lead by gradually implementing social responsibility policies to reflect that. As fashion becomes more and more ethical, it is our hope that supply chains that revolve around animals will be a thing of the past.

F

FUR FREE IS THE FUTURE OF FASHION 6


NG ER MODERN REVOLUTION

FUTURE

FUR FREE

FUTURE REVOLUTION FUR FREE FUTURE

7


we are taking lead

in a fashion revolution creating a turning point in the business world, and starting the movement for all businesses to turn away from fur and substitute cruelty-free garments in its place.

CREATIVITY CAN JUMP IN MANY DIFFERENT DIRECTIONS INSTEAD OF USING FURS. the climate change impact of fur climate change impact of 1 kg material

wool fabric polyester fabric polyacryl fabric cotton fabric mink fur

25

50

75

100

kg CO2 eq 8

125

150


fur is heavily processed with chemicals In tests, clothing items for children and adolescents all contained hazardous chemicals

28%

33%

67%

contained chromium VI, which is highly allergenic, is known to cause eczema & is genotoxic

contained chromium, which can potentially cause allergies

contained PAHs (Polycyclic Aromatic Hydrocarbons), many of which are carcinogenic

100% contained formaldehyde, which causes allergies and even multiple forms of cancer

100% contained NPEO (nonylphenol ethoxylates) which are endocrine disrupters

the numbers we will help diminish

1,000,000,000

rabbits are killed each year so that their fur can be used in clothing

1,000,000

animals are bludgeoned, hanged, bled to death, & often skinned alive for their fur

85%

of the fur industry’s skins come from animals who were captive on fur factory farms

100 animals

or more are killed for just a single coat

6,000

fur farms in the EU alone 9


GIRLS‘

EMPOW

INITIATIV

Explores innovative, scalable solutions to some of the most pressing problems facing adolescent girls today, and invests in programming and research that yield transformative, measurable results in girls' lives and communities.

Founding Partner of UNICEF’s Girls’ Empowerment Initiative

1,000,000 million euro donated

50,000

girls reached directly

150,000

girls reached indirectly 10


WERMENT ERMENT

IVE

ME EMPOWER 11


Alessandro Michele Creative Director

Laurence Boone Chief Financial Officer

Daniela Riccardi Vice President of Marketing

board

of

directors Sophie Bouchillou Corporate Communications Specialist

12


Baudouin Prot Director of Public Relations

François-Henri Pinault Vice Chair

Sophie L’Hélias Legal and Corporate Affairs Officer

Sapna Sood Production Manager

Marco Bizzarri President & CEO

13


outstanding top-line growth & margin expansion record-breaking performances double-digit growth continues sustained growth across all regions & channels exceptional performance across the board outstanding top-line growth & margin expansion strong operating leverage & ongoing STRONGEST investments across the board record-breaking performances REVENUE double-digit growth continues INCREASE IN 20 YEARS sustained growth across all regions & In March 2017 channels we experienced an exceptional financial performance across the performance exceptional board, with a record first quarter across the board revenue increase of 51 percent— our strongest in 20 years.outstanding top-line growth & margin expansion strong operating leverage & ongoing investments across the board record-breaking performances double-digit growth continues sustained growth across all regions & channels

REAPING THE

BENEFITS

14


ne on es es & ls ce rd ne on ng rd es es & ls ce rd ne on ng rd es es & ls

Innovative brand positioning and narrative engaging a wide cross-section of customers across various nationalities and demographics

Continuing roll-out of new store concept all categories up strong double digit, on both Men and Women, driven by carryover and newness

Investments in marketing, communications and supply chains

sustaining momentum and showing a well-balanced growth across all nationalities and regions

2017 Key Figures

4,700,000,000 billion euro in sales

1,257,000

million euro in recurring operating income

17%

growth from the year before

11, 253

full-time employees

550

directly operated stores

6,100,000,000

billion euro in predicted sales for 2018 15


DIFFERENTIATION GROUNDED IN

CREATIVE VISION modernity

desirability

Reflected in our CEO-Designer partnerships, consistent balance and coherence over the board, & operating excellence

Nurturing our longstanding capital brand attractiveness to grow & sustain market share gains

production practices

legacy

Careful selection of designers & constant persuance of new talents & the most sustainable practices

Anchoring our designers, products, and traditions in innovation while leveraging their historical heritage

liquity overview (in €m) 1,609

900 € 600 €

300 €

608

598

2019

2020

723

648

185

150 €

2018

16

2021

2022

beyond

At Gucci, we are boasting an average maintained maturity with a strong momentum in steady growth for the years to come.


revenue growth by quarter

51%

40.1%

+

+

42.7%

+

43.3%

+

60%

45%

30% In 2017, we also saw double-digit growth in all product categories, along with a sharp increase in full-price sales.

15%

Q1

Q2

Q3

Q4

revenue breakdown by region

22%

31%

10%

Western Europe

Japan

North America

26% Asia Pacific

17


OUR LEGACY

Founded in Florence in 1921, Gucci is synonymous with Italian luxury and offers the perfect fusion of two core values: superior craftsmanship and creativity. To this day, Gucci continues to showcase the very best Italian craftsmanship. Gucci’s strategic vision, as expressed by our CEO Marco Bizzarri, is to create products that are in line with the world of today: more relevant and attractive for new consumers, particularly the younger generation. In terms of distribution, the brand’s priority is to focus on existing stores, gradually aligning their aesthetic with Gucci’s powerful new creative vision.

18


Our business model is designed to provide our customers with the highest quality products, which are made in Italy in a responsible manner. Corporate Social Responsibility is one of Gucci’s core values and is at the base of the brand’s identity. We recognize that the philosophy of “Sustainable Value” is at the heart of our management policies and our corporate conduct, which means that we have implemented a process to integrate social, environmental, ethical, human rights and consumer concerns into our business operations.

CRAFTING TOMORROW’S

LUXURY we create

innovations to ensure our planet, our industry, and our brand thrive for the long-run by launching disruptive innovation & empowering future generations

we collaborate

with people across our business ecosystem including suppliers, employees, & clients to preserve our industry’s heritage, instill gender parity & diversity, and provide exceptional employment

we care

for our impact on the planet, on climate change, & on natural resources by reducing our environmental footprint, as well as preserving our raw materials 19


A MOVEMENT TOWARDS CHANGE

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