Bloomberg the Company & Products

Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

Businessweek Archives

Scuffed Up Gucci May Get A Shine


Inside Wall Street

SCUFFED-UP GUCCI MAY GET A SHINE

With Gucci Group (GUC) close to its 1997 low of 61 a share, recent investors are disappointed. CEO Domenico de Sole shares their feeling and says the stock was beaten down unjustly.

What's he going to do about it? "Everything," he says. The company will buy back shares (it has $200 million in cash, notes de Sole); enlarge stores in big cities, including Tokyo, Milan, and Paris; add 25 new stores; and expand new products, such as more ready-to-wear apparel and fashion jewelry. "We're obsessed with keeping intact the quality of our world-famous brand," says de Sole, "while we expand our reach in Europe and Asia and bolster our strength in the U.S." Gucci sales are expected to hit $1.1 billion this year and $1.3 billion next.

"We will move fast," vows de Sole, just as he did three years ago when Gucci was battling bankruptcy and liquidation. Bahrain's Investcorp International bought the company from the Gucci family and brought in de Sole. Investcorp took the company public in October, 1995, at 22 a share and finally sold all its shares in a secondary offering in March, 1996, at 48.

In spite of the stock's recent poor showing, analysts remain bullish: "Gucci is by far the cheapest growth stock, not only in luxury goods but in the whole European retail sector," says Claire Kent of Morgan Stanley, Dean Witter Discover, in London. She expects Gucci to earn $3.38 a share in the year ending Jan. 30, 1998, and $4.05 in 1999, vs. 1997's $2.76. Her target for the stock: 90.By GENE G. MARCIAL


LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus