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Goods activity: Gucci Group

In 2005, Gucci Group generated revenue of €3,036 million, up by 11.9%.

With revenue of €1,258 million, Europe is a key market for the Group, which recorded 10.3% revenue growth for the year thanks
to product quality and a highly selective policy of opening directly operated stores.

In North America, Gucci Group recorded revenue of €595 million in 2005, an increase of 7.6% comparate to 2004. Given its importance
in the global economy, North America remains a high-potential region for the luxury goods industry.

Gucci Group is committed to expanding its share in the fast-growing markets of Asia, where it recorded a 16.1% growth in 2005. At the
end of the year 2005, 217 of its 426 directly-operated stores were located in this area. Over the next two years, 50% of the new Gucci
Group store openings will take place in Asia.

A broad, diversified product portfolio

Gucci Group designs, manufactures and markets high-end luxury goods items, including ready-to-wear, leather goods, shoes, watches,
jewellery, ties and scarves, fragrances, cosmetics and skincare products. The extensive product range is one of the Group’s greatest strengths.
It is a source of organic growth and one of the main criteria for the acquisition policy conducted between 1999 and 2001.

As a multi-brand group, Gucci Group has promoted the sharing of knowledge among its various brands, capitalizing on the specific expertise.
The Gucci brand, which has a long-standing reputation in fashion, leather goods and accessories, has shared its in-depth knowledge with the
other brands of the Group to successfully build the Group market share in the luxury goods industry. Gucci Group Watches manufactures its
products in Switzerland and markets Gucci, BEDAT & CO and Boucheron timepieces worldwide. Lastly, YSL Beauté creates, manufactures
and distributes fragrances and cosmetics for Yves Saint Laurent, as well as fragrances for Boucheron, Alexander McQueen and Stella

Breakdown of 2005 revenue Number of directly-operated

by geographical area stores


19.6% OTHER    


23 Reference document 2005

The Group’s activities – Luxury Goods

Presentation of the Luxury

A controlled distribution network

Management of brands and brand image is tightly controlled through the distribution network. The carefully controlled development of
an integrated distribution network with a sound geographical basis has been a key strategic focus for Gucci Group. Fashion goods and
accessories are mainly sold in directly-operated stores which are designed according to a specific concept for each brand, ensuring
consistency in terms of product display and service quality around the world. The 426 directly-operated stores generated 54% of Gucci
Group revenue in 2005.

Gucci Group’s products are also distributed through a selected number of exclusive franchise stores, duty-free boutiques, department and
specialty stores. The Gucci Group Watches activity markets its products directly through jewellery stores on most major markets,
or through third parties. YSL Beauté focuses on locations which correspond best to its product prestigious image, marketing its products
through subsidiaries in upscale perfume shops, department stores and duty-free boutiques.

A rigorous communication policy

Creative design, product quality and brand image are closely linked in the luxury goods industry. Through rigorous management of brand
image, tight communication policy, outstanding product quality and a carefully controlled distribution network, Gucci Group has succee-
ded in strengthening and reinforcing its brands’ leading status over the past few years. The goal of the communication activities, which
combine fashion shows, advertising campaigns, public relations, special events and store displays, is to maintain the brands’ exclusive
image while ensuring high profile and consistent visibility and reinforcing their market positioning at the international, national and local level.

Contribution of each brand to 2005

recurring operating income
As % of recurring operating income





3.5% 4.0%

-16.9% -15.2%

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Goods activity: Gucci Group

Gucci Group’s strategy is based on three main objectives: ensuring revenue growth and profitability at Gucci Group, refocusing on the
Gucci brand and assigning a specific task to each brand within the portfolio. The latter point strengthens the coherence of the multi-brand

In order to implement its strategy, Gucci Group has overhauled its organisational structure. The Group has granted substantial autonomy,
within specific guidelines, to the CEOs of the various brands who are now in charge of design, merchandising and all aspects of the
operating and financial results of their respective brands.

Regarding the supply chain, Gucci Group takes care to guarantee exceptional product quality. To achieve this, it selects the very best
materials and exercises very strict controls over production, whether in-house or by outside partners. Prototype development and the
entire manufacturing process are monitored constantly for quality control. In addition, Gucci Group is making its supply chain more flexible
in order to rotate its collections and replenish stocks faster during the season. The group also keeps a watchful eye on practices by the
main competitors in luxury goods and other industries in order to stay on top in terms of supply chain.

Outstanding financial performance

In 2005, Gucci Group posted revenue of €3,036 million, an increase of 11.9%, representing 17.1% of the PPR Group’s revenue. It also gene-
rated operating income of €390 million, an increase of 35.4%, representing 34.1% of PPR operating income (excluding holding company).

Revenue and recurring operating income




2004 (1) 2005

Adjusted for the impact of the transition to IFRS and change in the reporting period of Gucci Group.

25 Reference document 2005

The Group’s activities – Luxury Goods

Brand established in Business concept

1921 Founded in Florence in 1921, Gucci built its reputation by specialising in the creation of high-quality
leather goods. As Gucci Group’s flagship brand, it is now one of the most prominent and profitable
brands in the luxury goods sector. Gucci manufactures and markets leather goods (handbags, small
leather goods and luggage), shoes, ready-to-wear, silks and jewellery. The products are sold exclusively
through directly-operated stores and through exclusive Gucci franchise stores, department stores and

a1,807 M
2005 revenue
specialty stores around the world. In addition, Gucci manufactures and distributes watches through
Group-owned Gucci Group Watches in Switzerland. Licensed distributors manufacture and distribute
Gucci brand eyewear and fragrances.

a485 M
Gucci’s strong heritage is built on key critical foundations of uncompromising quality, superior crafts-
manship and made in Italy.
operating income
The Creative Leadership strengthened the focus on iconic brand symbols (Horsebit, Bamboo, GG logo,
Green/Red/Green web, Flora), re-inventing them in a modern and luxurious way. Their understanding

employees at end 2005
and appreciation for the brand’s heritage, together with the extraordinary talent in providing a fresh and
modern interpretation, drove Gucci to the excellent 2005 results.

Gucci has thus confirmed its outstanding growth potential in its main product categories and regions
worldwide, through the creative and innovative appeal of its offering, underscored by the increased
emphasis on communication policy and the development of exclusive goods.

directly-operated stores at end 2005 Strategy
Gucci’s growth strategy emphasises three main areas of action: capitalising on its state-of-the-art
positioning in fashion, innovation and product quality; maintaining the strong momentum in leather
goods and shoes; exploiting new opportunities in jewellery, ready-to-wear and watches, as these
product categories have recorded improved results since the fourth quarter of 2005 and should continue
to post strong growth in 2006.

Breakdown of 2005 revenue Breakdown of 2005 revenue

by geographical area by product category

3.3% 6.8%
20.5% 32.8% READY-TO-WEAR
12.2% 54.3% WATCHES
22.7% 12.7% OTHER

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Gucci operates in 55 countries, and thanks to strong global brand recognition the brand is successfully developing its presence in the
emerging markets. The global balance of the revenue breakdown by geographical area ensures that future results will come from a com-
bination of continued growth in the major markets (Europe, Japan, and USA) and exploiting opportunities in fast growing new markets,
such as China where Gucci owned seven stores as at the end of 2005.

Financial results

In 2005 Gucci revenue amounted to €1,807 million with an increase of 13.6%. Directly-operated stores represented 71% of 2005
revenue and recorded a 14.7% increase. Gucci posted double digit growth in each of the major geographical regions, i.e. Europe (which accounts
for 32.8% of revenue), USA (20.5%), and Asia Pacific excluding Japan (20.7%). Leather goods, the cornerstone of the Gucci heritage, continue to
be the core business, representing 54% of revenue.
Gucci Group recorded a strong increase in recurring operating income, which rose by 14.7% to €485 million, with operating margin at 26.9%,
compared to 26.6% in 2004.

2005 highlights and outlook

In July 2005, Mark Lee was appointed CEO of the Gucci brand. Mark Lee was formerly President and Managing Director of the Gucci
brand from November 2004 and has worked with Gucci Group since 1996.

In terms of new products, 2005 was characterised by the launch of La Pelle Guccissima, the first signature leather collection introduced in
August. La Pelle Guccissima is a perfect expression of a modern classic, the Gucci tradition in a new, luxurious interpretation. The legen-
dary Gucci symbols, GG logo and the horsebit, have been redefined by Frida Giannini, Creative Director of the brand, using precious and
innovative materials. The extremely positive reaction of the market contributed to increased leather goods and footwear activity, making
La Pelle Guccissima a new core business to be renewed each season.

In 2005, Gucci opened important stores in a number of key markets, including Canada (Vancouver), South Korea (Hyundai Ulsan),
and the USA (Naples). At the end of 2005 Gucci has 207 directly-operated stores worldwide.

As the brand approaches its 85th anniversary (1921–2006), the goal for the coming year is to strengthen the presence both in
consolidated markets and in emerging countries, leveraging the positive momentum for accessories and shoes.

Revenue and recurring operating income




2004 (1) 2005

Adjusted for the impact of the transition to IFRS and change in the reporting period of Gucci Group.

27 Reference document 2005

The Group’s activities – Luxury Goods

Brand established in Business concept

1966 Bottega Veneta – meaning “Venetian workshop” – creates luxury goods based on its core values of
quality, craftsmanship, exclusivity and discreet luxury. The brand began as a leather goods house made
famous through its signature intrecciato, a unique leather weaving technique created by the Bottega
Veneta artisans, and it has now a full product range of leather goods (handbags, small leather goods and
full collection of luggage), men and women’s ready-to-wear, shoes, and other accessories.

a160 M
2005 revenue
From its beginning, Bottega Veneta has stood for the highest craftsmanship, the choice of finest
materials product, design innovation and softness of its products. It was the first brand to introduce the

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deconstructed bag as opposed to the usual rigid construction of handbags coming from the French
school. However, at the time the brand was bought by Gucci Group in February 2001, the company
was in a difficult position having gone through a number of failed re-positioning attempts following the
operating income departure of its founder and his creative vision in the early 1980s.

Under the creative leadership of Tomas Maier and a new management team, Bottega Veneta has
re-established its high-end luxury positioning with products able to satisfy the most demanding clients.

employees at end 2005
By combining traditional luxury goods values – exclusivity, craftsmanship and the highest quality – with inno-
vation, its products are modern with timeless elegance. Bottega Veneta is synonymous with understated
elegance and in keeping with the brand’s slogan, “When your own initials are enough”, the label is only
present inside the products. Bottega Veneta owes its exceptional product quality to the work of its
meticulous craftsmen based in its workshop in Vicenza.

directly-operated stores
Bottega Veneta products are sold exclusively through a tightly-controlled distribution network of
directly-operated stores, exclusive franchise stores and carefully selected department and specialty
stores around the world. At the end of 2005, Bottega Veneta had a network of 83 directly-operated
at end 2005
stores, which generated 87% of the brand’s 2005 revenue.

Breakdown of 2005 revenue Breakdown of 2005 revenue

by geographical area by product category
0.3% 2.8%


OTHER 85.0%

PPR 28

Bottega Veneta continued to strengthen its position as a brand dedicated to life-style through its jewellery collections, furnishings (decorative
accessories, tableware and office items, candles and interior fragrances) and gift items, whose launch was a great success.

Bottega Veneta is and will remain an exclusive and discreet niche market luxury brand.

Financial results

In 2005, revenue amounted to €160 million, a 60.2% increase year on year. Thanks to the consistent strengths of the collections, reve-
nue for the period was driven by strong performance in both existing and in the newly opened directly-operated stores as well as in the
wholesale distribution channel. In 2005, Bottega Veneta recorded a profit and exceeded its initial target, with recurring operating income
at €14 million.

2005 highlights and outlook

Bottega Veneta had many successes in 2005. The brand opened 18 new directly-owned stores, increasing its presence significantly in
the Asia Pacific excluding Japan, where the brand opened 10 new stores in the year.
New handbag styles launched in 2005 were major successes and styles such as the Cocker and the Ball Bag are in the top 10 best
sellers along with the long standing Veneta. The exclusive limited edition handbag the Cabat was described by the leading Italian
newspaper, Il Corriere della Sera as “the desired object of excellence for any woman”. The Cabat continues to be produced in such limited
quantities that many stores now carry waiting lists.
In March 2005, Tomas Maier presented the brand’s first women’s ready-to-wear runway show which received very positive reviews;
the second runway show held in October 2005 received even stronger reviews, confirming the success of the collections. The runway
shows led to the strong development of the ready-to-wear, shoes, jewellery and belts activities, whilst highlighting the outstanding level
of craftsmanship in handbags and leather goods. The feedback from the new 2006 Spring/Summer collections has been already very
strong and gives a positive outlook for 2006.

The brand plans to open new stores in 2006. After opening a flagship store on Avenue Montaigne in Paris (300 sq.m.), the company plans
to open a new store in the Omotesando area in Tokyo (270 sq.m.), and another one in Kalakua, Honolulu (256 sq.m.).

Revenue and recurring operating income



Adjusted for the impact of the transition to IFRS and change in the reporting period of Gucci Group.

29 Reference document 2005

The Group’s activities – Luxury Goods

Brand established in Business concept

1961 Yves Saint Laurent core product lines are men’s and women’s ready-to-wear, leather goods and shoes.
The brand distributes its products and collections through directly-operated and franchise stores,
as well as through department stores and specialty boutiques. Yves Saint Laurent grants licenses for the
production and distribution of some products, including selected men’s ready-to-wear and eyewear.

a162 M
2005 revenue
Since its foundation in 1961 Yves Saint Laurent has been a global success and had lasting impact on
fashion. For nearly 40 years, founder Yves Saint Laurent built a reputation as one of the 20th century’s
most innovative and provocative designers. He instigated the move toward ready-to-wear collections,

-a66 M
which represented the first step in making designer labels accessible to a wider public.

Since Gucci Group acquired Yves Saint Laurent in 1999, the management team has been focused on
operating income repositioning the brand at the top end of the luxury goods market. The number of licences has been
cut from 167 to 11. Alongside the brand repositioning, significant investments have been made in the
network of directly-operated stores and manufacturing facilities. Today Yves Saint Laurent operates 62

employees at end 2005
directly-operated stores, including flagship stores in Paris, New York, London and Hong Kong. The di-
rectly-operated stores generated 67% of Yves Saint Laurent revenues in 2005. The brand is also present
in more than 400 of the most prestigious boutiques and multi-brand department stores in the world.
At the same time, Yves Saint Laurent has successfully expanded into accessories, complementing its
core ready-to-wear business. Thanks to Gucci’s expertise in leather goods, Yves Saint Laurent has a
thriving activity in leather goods and shoes, which now accounts for 45% of the brand’s revenue.

directly-operated stores at end 2005

Breakdown of 2005 revenue Breakdown of 2005 revenue

by geographical area by product category

6.5% 1.1%


12.8% 44.1% JAPAN 13.1% SHOES


26.1% 31.9%

PPR 30

Alongside the brand repositioning, Yves Saint Laurent current challenge is to improve financial performance through increased revenue.
Yves Saint Laurent prime objective is therefore to create highly desirable products which reflect the very essence of the brand. This will
involve broadening the product range while respecting the brand’s fundamental identity and its historical presence in ready-to-wear.

Financial results

Yves Saint Laurent’s annual revenue totalled €162 million, with a decline of 4.3% compared to 2004. The softness in the first nine months of
the year was partially offset by a better fourth quarter. The operating loss stood at €66 million, down by €5 million over one year.

2005 highlights and outlook

2005 was an important year for Yves Saint Laurent management with the appointment of Valérie Hermann as the new CEO.

After softer first 9 months, the 2005 last quarter showed positive signs of recovery in most of the businesses, in particular shoes and lea-
ther goods, with good momentum in December. Europe and Asia Pacific excluding Japan saw higher growth, thanks also to the success
of the 2006 ready-to-wear Cruise collection as well as the newest leather goods products (i.e. Muse bag).
Yves Saint Laurent has established excellent management and creative design teams which will ensure the brand’s success. In 2005,
Stefano Pilati, the very talented Creative Director for the entire product range, received critical acclaim worldwide and was named
“Designer of the Year” by the Spanish press.

Revenue and recurring operating income




2004 (1) 2005

-71 -66
Adjusted for the impact of the transition to IFRS and change in the reporting period of Gucci Group.

31 Reference document 2005

The Group’s activities – Luxury Goods

Business concept

a613 M
2005 revenue
YSL Beauté creates, produces and distributes fragrances and cosmetics under the Yves Saint Laurent
and Roger & Gallet brands, as well as fragrances for Gucci Group brands like Stella McCartney, Alexander
McQueen and Boucheron. YSL Beauté sells its products through leading department stores, specialty
stores and duty-free boutiques and uses distribution agents, overseen by its regional offices, to reach
the markets not covered by its subsidiaries.

a15 M
2005recurring Strategy
operating income
YSL Beauté is a major player in the luxury fragances and cosmetics market. As a multi-brand
company, it develops and expands each brand in its portfolio on the basis of the brand’s distinctive
features. Its products represent the state of the art in terms of quality, creativity and technology.

employees at end 2005
YSL Beauté’s reactivity and flexibility enables it to promptly respond to changing market trends.

YSL Beauté contributes to global awareness of the Yves Saint Laurent brand as well as of Alexander
McQueen, Boucheron, and Stella McCartney, and provides Gucci Group with privileged access to the
luxury fragrances and cosmetics sector.

Breakdown of 2005 revenue Breakdown of 2005 revenue

by geographical area by product category

5.2% 0.4%
68.5% JAPAN 67.1%

PPR 32
Financial results

During a challenging year for the sector, YSL Beauté’s revenue totalled €613 million, a decrease of 1.3%. Revenue was driven by make
up and the new designers’ fragrances (such as Stella by Stella Mc Cartney, My Queen by Alexander Mc Queen and Z Zegna by Ermenegildo
Zegna). Recurring operating income stood at 15 million euros.

2005 highlights and outlook

For the Yves Saint Laurent brand, 2005 was characterized by the consolidation of Cinéma, its latest women’s fragrance launched in
October 2004. It has become the third pillar line of the brand alongside Opium and Paris. Make-up represented a key segment in terms
of turnover and brand identity. Its growth was continuous and homogeneous worldwide, thanks to a high profile image and technological
novelties, and to star products such as Touche Eclat and Mascara Volume Effet Faux Cils. Skincare remained stable, in spite of the high
potential of its market, due to the lack of novelties in the course of the year.
Sales of the designers’ fragrances were very successful during the year, while the traditional brands (like Oscar de La Renta or
Van Cleef & Arpels) suffered through a difficult distribution market.

Revenue and recurring operating income

621 613



2004 (1) 2005

Adjusted for the impact of the transition to IFRS and change in the reporting period of Gucci Group.

33 Reference document 2005

The Group’s activities – Luxury Goods

Other brands
The following section covers Balenciaga, Boucheron, Sergio Rossi, BEDAT & CO, Alexander
McQueen and Stella McCartney. Since joining Gucci Group, all of these brands have seen
their revenue increase significantly, thanks to the individual creative vision of their designers
and the Group’s financial support.

a294 M
2005 revenue
Gucci Group’s support involved substantial investments to fund the development of
their collections, the opening of exclusive stores in the fashion capitals considered
strategic for each brand, the development of the wholesale network on a worldwide
scale, and the implementation of the infrastructure needed to support the growth.
The growth of these brands will require the business success of their collections, a carefully
controlled development of wholesale network and directly-operated stores, and improved

employees at end 2005


The House of Balenciaga is one of the most influential forces in fashion. Founded in 1919 by Cristóbal

directly-operated stores at end 2005
Balenciaga and established in Paris from 1936, the House’s haute couture defined many of the greatest
moments and movements in fashion from the 1930’s to 1960’s. The provocation of its design and vision,
the mastery of techniques and cut, and the constant innovation in fabrics marked out a special place for
Balenciaga in the hearts and minds of its privileged clients and followers.

In 1995, Nicolas Ghesquière joined Balenciaga and presented his first collection two years later,
at the age of 26. The young Designer’s work has since captured the attention of both the media and the
customers. Critical acclaim, including the VH1 Award for “Avant-Garde Designer of the Year” in 2000
and the “2001 International Designer Award” from the Council of Fashion Designers of America also
recognized and contributed to the brand’s business success.

Gucci Group partnered with Nicolas Ghesquière in 2001 to accelerate the development of the activity
internationally. Sales in the brand’s men’s and women’s ready-to-wear and accessories collections have
since grown exponentially, enabling the brand to post a profit in 2005.

While the brand’s identity is firmly anchored and reflected in its iconic ready-to-wear collections, the
bag and shoe ranges have also enjoyed phenomenal success worldwide. The women’s ready-to-wear
collection covers a wide range of price positioning, from the iconic pieces, to the more continuative
“capsule” products that provide broader customers access to Balenciaga’s style.

In the early years of its modern renaissance, Balenciaga has deliberately prioritized the exclusivity of its
distribution. With its product platform now well established and demand for bags, clothes and shoes
now high, Balenciaga is looking forward to selective growth in its international distribution network. The
House unveiled the new store concept in its New York and Paris flagships during 2003, and further retail
stores are in planning. Franchise and similar exclusive distribution arrangements are in operation or
under negotiation with first class partners in key franchise markets such as Hong Kong, Taiwan, South of
Korea, Singapore, Russia and Middle Eastern markets. Wholesale distribution presence is also targeted
to increase, while carefully preserving the brand’s undeniable prestige and mystique. This spirit, both
from its heritage and its more contemporary incarnation, will be show-cased in a major exhibition to be
held from July 2006 at the Musée de la Mode et du Textile in Paris. A great and fitting tribute for a House
that enjoys again the provocative influence it wielded for decades.

PPR 34

Established in 1858, Boucheron was the first jeweller to establish a store on the famous Place Vendôme in 1893. It was also the first
to use new materials in its jewellery and to launch innovative products, such as interchangeable watch straps. For nearly 150 years
Boucheron has been a trend-setter in the exclusive jewellery segment, acquiring an international reputation.

A Gucci Group subsidiary since 2000, Boucheron manufactures and distributes jewellery, watches and luxury fragrances through
directly-operated stores, including its flagship store on Place Vendôme in Paris, franchise stores, department stores and exclusive
multi-brand boutiques. Since 2003, YSL Beauté has managed all aspects of Boucheron’s fragrance activity, including marketing, distri-
bution and coordination of the subsidiaries and international distributors.

The year 2005 marked the beginning of a new era for Boucheron in terms of image, communication, retail network and products.
A new store concept was created exclusively for the flagship boutique on Place Vendôme. A new advertising campaign with legendary
characters was launch and a new web-site has been created. A fine art book entitled La Capture de l’Eclat (Capturing the Sparkle) with
sumptuous photographs was published (Publisher Cercle d’Art). Boucheron opened two directly-operated stores in Monaco and at Har-
rod’s and three franchise stores in Almaty, Dubai and Shanghai.
The last high-jewellery collection, Trouble Désir, was an excellent success as well as four new jewellery lines and three new watch
models were successfully launched in 2005.

Sergio Rossi

Sergio Rossi is a leading Italian luxury goods brand focusing on manufacturing and distributing glamorous shoes for women. The company
also produces and distributes handbags and men’s shoes. Its products are distributed through directly-operated stores, leading depart-
ment stores and upscale specialty boutiques. Sergio Rossi has built a notable reputation in Italian luxury goods through a combination of
exceptional product quality and unique style, season after season. Gucci Group’s acquisition of Sergio Rossi in 1999 marked a new stage
in the development of this brand, whose origins date back to the 1950s. The Italian shoe manufacturer has tripled its distribution network,
which included 43 stores as at end 2005.

In 2005, Sergio Rossi revenues declined compared to the previous year. However, in the last quarter the activity showed significant im-
provements, thanks to the good performance of the Fall/Winter collection both at directly-operated stores and wholesale levels and the
strong momentum of the Japanese market.

The Company appointed Edmundo Castillo as new designer for the brand. With his attitude and his Latin spirit, Edmundo will have an
extremely important role in developping the image of the brand.

Sergio Rossi’s profitability suffered from over-investment in production and distribution at a time when some collections underperformed.
The new management team aims to have Sergio Rossi breakeven by 2007. To achieve this, they plan to better balance the collections,
by broadening the range of leather goods and its stylish desirable footwear models for women, developing a complete range of shoes
for men, streamlining the store network and keeping costs under tight control.

35 Reference document 2005

The Group’s activities – Luxury Goods

Other brands

Founded in 1996 by Simone and Christian Bédat, BEDAT & CO is a unique, contemporary and exclusive watch brand which combines
quality with timeless value. Distributed primarily in the United States, Italy and Japan, BEDAT & CO offers a handful of exclusive models,
for which the quality and origin are guaranteed by the Swiss A.O.S.C ® certificate. By working with Gucci Group Watches, BEDAT & CO
plans to expand both its product offering and its distribution network into new markets in Europe and Asia.

Alexander McQueen

Alexander McQueen has an outstanding reputation in the world of fashion. Known for his audacity and creativity, the British designer
won the U.K. “Designer of the Year Award” in 1996, 1997, 2001 and 2003. He received the “Best International Designer Award” from the
Council of Fashion Designers of America in June 2003 and was named “Menswear Designer of the Year” at the British Fashion Awards
in November 2004.

A 51% subsidiary of Gucci Group since 2001, Alexander McQueen primarily markets women’s accessories and ready-to-wear through
its own retail network and upscale department and specialty stores. The brand has three directly-operated stores, in London, Milan and
New York and in the last two years several shop-in shop concepts have been opened with leading wholesale clients in the UK (Harvey
Nichols and Selfridges), France (Le Printemps) and Asia (Joyce in Hong Kong).

In 2005, the Company has continued to put in place the key strategic building blocks that position the brand for long term growth and
to achieve profitability by 2007, in line with its targets. New categories of men’s ready-to-wear, shoes and small leather goods have been
added to the brand portfolio, enabling stronger and broader global representation. In March 2005, a new handbag line, part of the 2005
Fall Winter collection, met with particularly strong acclaim by press and buyers; this line has been developed further in the 2006 Spring-
Summer season and provides a promising ground for future success in the Alexander McQueen accessories line-up.
In September 2005, the company launched its second women’s fragrance, My Queen, as part of its licence arrangement with YSL Beauté.

In addition, the company has carefully entered into selected strategic brand licensing partnerships that are consistent with the brand’s
core values and the Alexander McQueen collections, increase brand awareness and offer revenue streams to complement the existing
core business. In this context, in June 2005, the company announced the signature of a three year licensing agreement with Puma AG
for a co-branded line of sports leisure shoes for men and women, positioned at the upper end of the market. In November 2005, a five
year licensing agreement with SINV SpA was announced for the launch of a denim-based ready-to-wear line under a new label “McQ
– Alexander McQueen”. Both of these important strategic partnerships will allow Alexander McQueen’s internationally acclaimed design
ethos to reach a much wider audience, whilst complementing the brand’s existing highly successful main line collections of luxury ready-
to-wear and accessories.

PPR 36
Stella McCartney

The Stella McCartney brand was established in partnership with Gucci Group in mid-2001, with its first collection of ready-to-wear unveiled to
the world’s media and leading wholesale clients in October that year. Since then, the Stella McCartney activity has developed at a strong pace,
and collections of non-leather shoes, bags and other accessories have been added to complement the core ready-to-wear business.

The brand directly-operates three retail stores, in New York, London and Los Angeles. The brand is also available through a network of
upscale wholesale clients around the world, many of which present the brand’s collections within in-store environments that feature iconic
elements of the full store concepts of the brand’s own retail stores.

The strength and breadth of appeal of the Stella McCartney brand name has also been demonstrated by the success of a num-
ber of carefully managed strategic licences granted to major international partners capable of respecting and promoting the
brand’s identity and values. The brand’s first fragrance line was launched under licence through YSL Beauté. The line has met with
considerable success (including receiving major international awards) and has grown into a sizeable activity. The brand also offers
eyewear through a license with Safilo since 2003.

In 2005, a major licence partnership was established with Adidas for a women sportswear line. The first “Adidas by Stella McCartney”
products became available from early 2005 through a limited number of selected Adidas stores and leading Adidas wholesale clients,
primarily in the USA, Japan and Europe. In similar vein, H&M approached Stella McCartney in early 2005 for a major one-season partnership.
The one-off women’s ready-to-wear collection launched in November 2005 proved a tremendous success, further fuelling awareness of
the brand worldwide.

37 Reference document 2005