Dior is attracting less than benevolent attention from analysts and the financial community. After HSBC, Bernstein also has something to say about the LVMH-controlled brand’s trajectory. The expectation is that it may end up in the same quagmire as Gucci, one of the luxury brands most in crisis currently.
Similarities and differences
Bernstein analysts, led by Luca Solca, start from the fact that both Gucci and Dior have doubled sales in less than five years. The Kering Group’s flagship brand went from 3.9 billion euros in 2015 to 8.3 billion euros in 2018. Dior, Bernstein estimates, went from 6.4 billion euros in 2019 to 11.9 billion euros in 2023. But now the trajectory has reversed. Dior posted a double-digit decline in the third quarter 2024, while Gucci has been struggling for some time. The comparison can be made, but there is a substantial difference between the two cases: LVMH can more easily absorb Dior’s momentary weakness than Kering can with Gucci.
A strength, with limitations
According to Bernstein, thanks to its “secret recipe“, Kering is able to grow brands quickly. How? By making them more aesthetically appealing. But this also entails risks. Gucci, for example, had moved into an extreme position with Alessandro Michele, so when the fashion trend changed and “quiet luxury” arrived, Bernstein explains, Gucci was out of the picture. Whereas now that, with Sabato De Sarno, Gucci is trying to be “quiet”, the appeal for “discreet” customers is still missing, and it no longer appeals to those who like more fashionable offerings.
In the same quagmire as Gucci
Meanwhile, speaking of differences, while Dior has raised prices too much (to chase Chanel? Bernstein wonders), Gucci is still working on increasing them. Speaking of similarities, both brands suffer from comparison anxiety. Gucci aspires to become Louis Vuitton, while Dior aspires to become Chanel. It’s a challenge they also fight on a financial and budgetary level. Because being smaller than LV and Chanel, both have to develop faster, which causes a type of anxiety that forces them to seek their own (risky) growth path.
Eyes on Chiuri
Just as HSBC wished for a change at the helm of Dior Femme, Bernstein claims not to be convinced of the positiveness of Gucci’s creative direction, let alone Dior’s. With regard to Gucci “the change has not yet excited consumers. We question whether Gucci’s new creative direction is right”. While Dior is “more of the same”: “It’s not known whether Maria Grazia Chiuri will stay or not“, Bernstein writes. Who then concludes the report by stating, “Both Gucci and Dior do not appear to be close to resolving their situation. Gucci has embarked on a significant creative and management turnaround. But will these changes be enough? Are they pointed in the right direction? While will the small changes made by Dior (the arrival of Benedetta Petruzzo and Kim Jones focused exclusively on Dior) make a difference?”
Read also:
