Bottega Veneta sent an earnings notice this morning, just one day after parent company PPR’s 2011 results came out. It was good, to be sure — €682.6m in total revenue — but in my experience, it was also unusual.
After all, isn’t Bottega a PPR luxury brand? Weren’t its results covered in the parent earnings announcement?
Yes. PPR highlights the numbers for Bottega, Gucci and Yves Saint Laurent in its “luxury division”, with the rest of the high-end names (Balenciaga, Alexander McQueen, Sergio Rossi, Boucheron) bundled under “other brands”. Traditionally, the big luxury groups have avoided breaking out one brand in particular. LVMH, for example, groups its luxury brands under “fashion & leather goods” and “watches & jewellery”.
The rationale is not hard to understand. Historically, the profits of these groups have been powered by an enormous engine brand, which allows them, in turn, to invest heavily in smaller brands without having to disclose any possible losses. Overall, the revenues keep rising, even if their sources might be unbalanced.
Because Gucci was its own listed company before PPR bought it, the group decided to keep its numbers transparent and then added YSL and Bottega to the list. Given this, the purpose of Bottega’s release, says a spokesperson, is simply to highlight how well the brand is doing (one of the reasons its chief executive has been elevated to the PPR board) so it can be seen as a success story on its own. And, they go on, PPR allows brands autonomy in deciding to further underscore their financial communications and expand on them. Bottega had, the Bottega folks said, for example, “double-digit revenue growth in all markets,” though they did not break these down specifically by region.
Such transparency, while laudable, is a risky move. Once you open this door, it’s hard to close. Once a brand starts trumpeting its figures, it really can’t stop without raising all sorts of warning flags. And if some of these brands’ numbers are broken down and others aren’t, one might suspect that they probably aren’t doing so well (though according to a group spokesperson, it’s just because they are too small to really interest analysts).
It reminds me of being in school, and having all your friends ask you what grade you got on a test. If you did well, the natural urge is to tell everyone and boast a bit, but once you do that, if you ever don’t tell they assume you got a bad grade. Personally, it always seemed a wiser decision to me, at least thinking long term, to keep mum. But then, maybe that’s why I am not the chief executive of a luxury brand.
Vanessa has been the FT’s fashion editor since 2003, and is based in New York, though she lived in London for 12 years.