July 31 (Bloomberg) -- Gucci Group, criticized by fashion journalists last year for risking its main brand’s cachet, made “less ostentatious” handbags as shoppers demanded tamer styles in the recession, Chief Executive Officer Robert Polet said.

Gucci’s new Pelham and Jackie handbags are “more subdued” than boom-year models, because consumers don’t like to flaunt their money at a time of an economic crisis, Polet told journalists today on the sidelines of parent company PPR SA’s post-earnings Paris press conference.

“The bags don’t scream Gucci, they don’t flaunt the logos,” Polet said of the new design for the $3,100 Jackie handbag. “Yet the shape is instantly recognizable as Gucci.” He also said the brand’s sales staff had been instructed to be “less pushy” during the economic crisis.

The Gucci brand’s sales rose 8.3 percent in the first half of the year, according to figures reported by PPR today, rebounding from the 2.6 percent pace in the second half of 2008. Patrizio di Marco, who replaced Mark Lee as the brand’s chief this year, said in May that he and head designer Frida Giannini had reduced the number of styles and started refreshing designs.

Under Lee, Giannini introduced canvas Joy bags with the interlocking-G logo costing as little as 400 euros ($568). They earned the wrath of fashion writers such as the Washington Post’s Robin Givhan. To be sure, Lee boosted sales 46 percent from 2004, when he took over the brand, through 2007.

‘Logomania’

Di Marco said in May that the Joy bags were being rejigged, and he was concentrating on innovations in the label’s mid- priced range of goods from 800 to 1,900 euros, adding crocodile and leather trim to enhance purses made from printed fabric..

“One of the mistakes Mark Lee made was to insist on the logomania,” said Armando Branchini, a consultant with Intercorporate in Milan. “The Gucci brand became a little schizophrenic. Giannini was brought in to design very edgy stuff, but they focused on the very high end and also the entry- level range. But the bulk was a bit poor.”

“Patrizio di Marco is one of the most skilled executives in the luxury industry,” he said of the former Bottega Veneta chief. “He is particularly good in leather goods.”

Gucci’s sales growth trailed even better figures from Louis Vuitton, the biggest fashion brand owned by PPR’s biggest competitor, LVMH Moet Hennessy Louis Vuitton SA, which exceeded 10 percent during the period.

‘Lasting Value’

Polet said fashion consumers are focusing more sharply on quality for a good price, seeking strong brands that project “lasting value,” and will “take their time” to make a decision compared to earlier years. Gucci Group’s other labels include Bottega Veneta fashions and Boucheron jewelry.

Sales of Gucci and smaller, more expensive label Bottega Veneta held up thanks to the network of company-owned stores that allowed Gucci Group to maintain control over the brands, Polet said. Gucci opened 14 new stores in the first half, including six in China.

Profitability at the brand declined during the period on increased royalty payments and the weakness of the yen against the euro. Gucci’s operating margin narrowed by 1.1 percentage points to 26 percent, PPR said today.

Polet declined to comment on the sales of Gucci sunglasses and timepieces. Demand for such accessories has been falling, with LVMH reporting a 17 percent slide in revenue from watches and jewelry. Swiss watch exports plunged 32 percent in June, the biggest monthly decline in at least two decades.

To contact the reporter on this story: Ladka Bauerova in Paris at lbauerova@bloomberg.net.

Last Updated: July 31, 2009 11:48 EDT