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Translated by
Nicola Mira
Feb 19, 2019
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4 minutes
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Bottega Veneta expects slow resurgence in 2019

Translated by
Nicola Mira
Feb 19, 2019

The hint of a revival seems to be on the horizon for Bottega Veneta. Sales for the Italian luxury label owned by the Kering group have been declining for the last three years, but in the fourth quarter 2018 the downturn eased a little, with sales down only 3%. While the label's direct retail sales, which account for 82% of total revenue, lost 4%, revenue for the wholesale channel grew by 2% thanks to a commercial reorganisation focusing on “the partners with the highest potential.”

The new ad campaign for Spring 2019 - Bottega Veneta

“Bottega Veneta reached a new milestone in its repositioning in 2018, after appointing Daniel Lee as creative director in June. In this transitional scenario, the label experienced a subdued financial year, with a revenue of €1.109 billion, down 5.7% in published figures and 3.4% in like-for-like terms,” said Kering’s chief financial officer, Jean-Marc Duplaix, speaking at the presentation of the group’s annual results.

Bottega Veneta, chiefly known for its leather goods expertise and the famous intrecciati (woven) leather bags, lost ground especially in its 279 monobrand stores, whose sales decreased by 5% in 2018, with a negative peak of -12% in western Europe. The label was affected by the decrease in tourist spending in Europe, a region which accounts for 28% of its total revenue, and could not compensate in the other regions where it operates, Asia-Pacific (39% of revenue), Japan (16%) and the USA (11%).

Recurring operating income in 2018 was €242 million (-17.7%), with profitability at 21.8%. This weakening was the result of mounting operating costs linked to the label’s relaunch. Bottega Veneta invested above all in its own stores, to improve the customer experience and the label’s visibility through new locations, store renovations and prestigious openings, such as the six-storey, 800 m-square-metre flagship it opened last December at 5-6-1 Ginza Chuo-Ku, in Tokyo. Also, a new interiors concept for the label’s stores will be unveiled in the course of this year.

Bottega Veneta was bought by Kering in 2001, and it soon boomed, recording double-digit growth from 2005 until it topped the €1 billion mark in 2015. That was also the year in which the label began to slow down significantly, its revenue posting a negative result in the fourth quarter 2015. Bottega Veneta was penalised by its very high price positioning, its extremely exclusive image and marked reliance on Asian customers, as well as by weak range diversification and by a perceived lack of creative rejuvenation.

The new Bottega Veneta megastore in Tokyo - DR

Kering appointed a new CEO for Bottega Veneta, Claus-Dietrich Lars, in September 2016, but it waited another two years to replace Tomas Maier, who was in charge of the label’s style for 17 years, with Daniel Lee, hired from Céline, where he was the director of ready-to-wear design.

British designer Lee, 32, immediately set to work to revamp the label’s brand image. Bottega Veneta’s Instagram account was blanked out and reset, and the pictures lensed by Tyrone LeBon for the first advertising campaign supervised by Lee heralded a more relaxed, uncontrived mood, a far cry from Tomas Maier’s faultlessly sophisticated ladies.

While staying true to the label’s high-class luxury and its artisanal expertise, Lee breathed into it an unfussy yet sensual style, which was positively received by buyers after the presentation of the Spring 2019 pre-collection.

“The feed-back has been good, in terms of opinion and orders placed. There is a market segment in which this kind of creativity is in high demand, and which isn’t currently exploited by other labels. It's a genuine opportunity for Bottega Veneta,” said the boss of Kering, François-Henri Pinault.

“Daniel's creative power will enable us to boost the label’s visibility and especially its appeal via an expansion of the ready-to-wear collection, which will pull other product categories in its wake in terms of growth,” added Pinault. The goal is to engineer a radical transformation of Bottega Veneta “into a global womenswear and leather goods label, and not a leather goods and womenswear one, as was the case before.”

The group wants to deploy with the Italian label the recipe that was so successful with Balenciaga, Saint Laurent and above all Gucci, whose powerful, highly recognisable image was built by creative director Alessandro Michele starting from ready-to-wear. “Apparel is the most creative product category. It's where a label’s desirability stems from, through its image and story-telling. Even if the share of overall revenue accounted for by ready-to-wear is relatively modest, the latter is far and away the driving category for a fashion label and the loyalty of its clientèle,” said Pinault.

Bottega Veneta’s sensual new look by Daniel Lee- Bottega Veneta

Leather goods currently account for 84% of Bottega Veneta’s total sales, while ready-to-wear accounts for 6%, footwear for 7% and other products for 3%. The plan is for ready-to-wear to reach 15%. “Daniel is brushing up all the categories, and it’s this integrated effort that will propel the label towards new heights,” said Pinault, who is expecting “significant medium-term results” from this repositioning work. “[Bottega Veneta] is a label with significant potential and the opportunity to grow considerably,” concluded Pinault.

CFO Duplaix qualified this statement, saying that “profitability will not improve in 2019. The start of the year is still part of the transition phase. The items of the first collection, which is showing in February, will arrive in-store later in the year. Revenue recovery will therefore begin to occur in the second part of the year.” In the meantime, Bottega Veneta’s show on February 22, at the Arco della Pace in Milan, is heralded as one of the high points of the forthcoming women’s fashion week.

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