Gucci Profits Tank; Transmission of SARS

…through overpriced, fake Kashmere clothing possible.

http://story.news.yahoo.com/news?tmpl=story&u=/afp/20030702/ts_afp/netherlands_italy_030702102037

So, let’s see. SARS was blamed, especially in Europe, were nary a case were found. The Iraqi war, which didn’t start until the end of the first quarter, was also blamed, as the Dutch have this ingrained fear of Iraq attacking them with super-hightech nanobots programmed to rust all the floodgates of the country. The Euro’s rise to fame, which came amid worldwide reports that most European countries were finally growing backbones, was also a problematic issue here. Americans were apparently deeply offended, and decided to give their money to hardcore American valuests [sic] such as Nike, Gap, and Martha Stewert, who are all about the good, wholesome American dollar and hoping to never pay their employees in it again.

Seriously, profits plunge 96%. Okay, I can deal. Sales plunge 6.7%. OK, I can still deal. Profits were only 1.2m Euros. Ouch! Sales were only… 657.1m Euros! We sold 657.1m Euros worth of merchandise, and managed to only make 1.2m Euros. Again, I repeat, we sold 657.1m Euros worth of merchandise, and managed to only make 1.2m Euros. Alright, so who the fuck put the kid from Camp Kill Yourself Bay Ranch in Jamaica in charge?

3DO blamed its bankruptcy on the Iraq war, too. Very popular these days.

As for the profit margin, is that unusual in the fashion industry? Consumer goods industries generally operate on razor-thin margins. It’s about 0.2% now which is indeed low, but that’s after a plunge of a whopping 96%, so it was ~30 million before, equalling a healthy 4.2% of the earlier sales of 704 million.

I don’t really know at what profit margin Gucci is supposed to operate – probably higher than generic clothing companies but certainly lower than top technology companies with their absurd double-digit profit margins.

Exactly the same thing happened after 9/11. Every incompetent board of directors and their dogs made a point of blaming the attack for the shitty performance of their companies.

Gucci and the rest of the major houses expanded heavily into mid priced goods during the 90s. With a tanking economy those customers dropped out. Gucci (in particular) didn’t accurately predict the decreased demand and were left with loads of unsold goods.