Gucci, a legacy luxury brand and top-money maker for French luxury-group owner Kering, has become a monster-sized headache for the group and drag on performance as brand revenues plunged 22% through the first nine months this year.

But beyond the financial, managerial and design challenges at Gucci, it’s reputation is threatened by a class-action lawsuit in the U.S. The suit claims Gucci deceived customers by presenting exotic-skin products as ethically-sourced. However, a PETA investigation found pythons and crocodiles were brutally abused to produce leather it turns into high-end luxury goods.

A ruling last week denied Gucci America’s motion to dismiss the lawsuit initially filed in March in the U.S. District Court of the Northern District of Illinois. The case now moves forward to discovery to determine how Gucci harvests animal skins and whether it is in keeping with claims it makes to customers.

Ethics In Question

Kering CEO and chairman François-Henri Pinault places great store in his company’s environmental, social and governance (ESG) policies.

“For many years, Kering has sought to take the lead in sustainability, guided by a vision of luxury that is inseparable from the very highest environmental and social values and standards,” he said in a statement.

Yet this suit challenges its ESG claims and puts the Gucci brand’s reputation at risk, the gold standard where a luxury brand is concerned.

“Ethical conduct is a critical driver of reputation – any attempt to mislead customers or to mask any unethical behavior, even if unintentional, could result in long-lasting reputation damage and erosion of trust in Gucci,” shared Stephen Hahn, executive vice president of RepTrak that advises companies on reputation building and management.

With demand for the brand cooling, the last thing Gucci needs is for consumers to lose more trust in the brand, giving them another reason to look elsewhere.

Plummeting Sales

Gucci revenues reached an all-time high of $11.3 billion (€10.5 billion) in 2022 and took a step back in 2023 to $10.7 billion (€10.7 billion). That 8% retreat was explained by the not unexpected easing of the post-pandemic luxury spending surge.

But in 2024, the post-pandemic adjustment turned into a full retreat. Through the first three quarters of 2024, Gucci is down over 20% from $7.9 billion (€7.3 billion) last year to $6.2 billion (€5.7 billion) at current exchange rates.

In the third quarter alone, Gucci dropped 26% to $1.8 billion (€1.6 billion) or 25% on a comparable basis. Difficult market conditions, particularly in Asia-Pacific, took much of the blame.

But it also reported comp sales at its Gucci retail network were off 25% and wholesale revenues dropped 38%, suggesting introductions from its new creative director Sabato de Sarno aren’t resonating with customers.

Management Upheaval

De Sarno came on board in January 2023, replacing Alessandro Michele whose designs are largely credited with spearheading Gucci’s phenomenal growth from 2015 to 2019, when sales more than doubled from $4.2 billion (€3.9 billion) to $10.4 billion (€9.6 billion).

Michele stepped down in November 2022 and less than a year later, Gucci CEO Marco Bizzarri, who brought Michele in and guided the brand’s growth, exited the company. He was temporarily replaced by Jean-François Palus.

This month Stefano Cantino was named CEO of Gucci after joining the company in May 2024 as deputy CEO. He will officially take the helm on January 1, 2025. Previously Cantino served five years as senior vice president of communications for Louis Vuitton and prior to that he was with Prada. 

Gucci needs all the communications expertise Cantino can muster as it battles a massive decline in demand and the potential reputation hit from the American class-action suit which calls into question the ethics of the brand and parent company Kering.  

Gucci’s Dirty Laundry

The class-action lawsuit has added weight because it was brought by a company insider who worked for 18 years as a salesperson at the Gucci Chicago store. The suit covers purchasers from January 2009 to the present.

The plaintiff, Tracy Cohen, claims she was an unwitting participant in Gucci’s fraud being required to perform a “selling ceremony” when presenting exotic-skin handbags and other products to customers.

“I trusted that my employer was giving me legitimate training. Instead, Gucci lied to me. I unknowingly deceived my customers, many of whom are animal lovers. The animals were not ‘ethically’ sourced but instead tortured in the name of luxury fashion,” said Cohen in a statement.

Earlier this year she learned that Thailand animal farms used by Gucci “engaged in abusive slaughter and skinning of pythons and crocodiles,” from a PETA investigation reported by CBS Market Watch. It revealed pythons were killed by striking them on the head with a hammer and crocodiles appeared to be still alive as skinning began.

“We are thankful to Tracy Cohen for coming forward to expose this brazen brand for consistently duping clients and its own employees about the suffering behind every stitch of its products,” said PETA president Ingrid Newkirk in a statement.

It is worth noting that this is the second suit Cohen has filed against Gucci this year. In the previous one she claimed age and mental health discrimination and demanded damages for violating laws prohibiting discrimination, retaliation, intentional infliction of emotional distress, abusive labor standards and unfair wages, according to The Guardian.

In both suits, she is represented by counsel Tamara Holder, but unlike her personal discrimination suit, the claims of customer fraud and mistreatment of animals raises broader ethical issues for Gucci and its customers. It also threatens to expose Gucci’s selling tactics that are systemically used to encourage customers to spend more for high-priced goods.

Animal Welfare To The Fore

If consumers become aware of these animal mistreatment allegations, as well as the sales tactics that Gucci uses, it could drive more customers away from the brand rather than to it, especially as there is growing concern about the welfare of animals that give up their lives for the fashion industry.

Kering’s Pinault understands this well as he announced in 2021 that all Kering brands would go fur-free, including Yves Saint Laurent, Alexander McQueen and Balenciaga. This followed Gucci’s decision to ban fur in 2017.

“When it comes to animal welfare, our Group has always demonstrated its willingness to improve practices within its own supply chain and the luxury sector in general,” he said.

“The time has now come to take a further step forward by ending the use of fur in all our collections. The world has changed, along with our clients, and luxury naturally needs to adapt to that.”

Fight Or Flight?

A Gucci spokesperson told WWD in July, “We are aware of the recent lawsuit that has been filed by Ms. Cohen. As company policy, we do not comment on pending litigation or publicly disclose information about former or current employees. We plan to vigorously defend this action in court.” The company did not respond to my request for comment.

But rather than vigorously defending itself in court, perhaps the more ethical course is to thank PETA for uncovering such unethical practices in its supply chain and take action immediately to correct it.

“To best manage through this potential reputation crisis, Gucci is required to operate with full transparency and integrity – in doing so it can minimize negative impact,” RepTrak’s Hahn advises.