Gucci boss says fashion label will be fur-free by 2018

Key Points
  • Fashion house to ban fur products from 2018.
  • Gucci move described as "game-changer" by animal welfare group.
  • UBS increases price target for parent company, Kering.
The Gucci fashion show at Milan Fashion Week.
Venturelli | WireImage | Getty Images

Luxury fashion brand Gucci will stop using animal fur in its clothing next year, beginning with its spring-summer collection.

Marco Bizzarri, the Italian firm's president and CEO, announced the fur-free policy Wednesday during the 2017 Kering Talk at the London College of Fashion.

"Being socially responsible is one of Gucci's core values, and we will continue to strive to do better for the environment and animals," he said.

Bizzarri said the decision to end the use of fur in Gucci clothing was in part thanks to the firm's current creative director, Alessandro Michele.

"In selecting a new creative director, I wanted to find someone who shared a belief in the importance of the same values. I sensed that immediately on meeting Alessandro for the first time," Bizzarri said.

Andrey Rudakov | Bloomberg | Getty Images

Bizzarri also thanked the Humane Society International and the Fur-Free Alliance for their work in helping the fashion house stop using animal fur.

In a statement, Humane Society said the Gucci move was a "huge game-changer" for the world of fashion. The society noted that Armani, Hugo Boss, Yoox Net-a-Porter and Stella McCartney are fashion companies that already refuse to use fur in their clothing.

Animal rights organization PETA (People for the Ethical Treatment of Animals) has long protested against fur in fashion and welcomed the news on Twitter.

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Gucci's remaining animal fur items will be sold at auction, with the proceeds going to Humane Society and Italian animal rights organization LAV.

Meanwhile, analysts at UBS investment bank have increased the price target of parent luxury group Kering to 385 euros, citing the ongoing popularity of the Gucci brand.

"We believe there is still more upside to earnings and FCF (free cash flow) from Gucci's renewed momentum than the market is pricing in, and sit 5 percent ahead of 2018 EPS forecasts," said the UBS research.

Ahead of third-quarter sales figures, UBS has raised its 2017 estimated EPS (earnings per share) by 3 percent and its 2018 estimate by 1 percent, although it noted upgrades at Gucci are partly offset by headwinds from the stronger euro.

UBS added that should Kering's Puma brand be sold off the company would sit in a cash positive position and, at current P/E (price over earnings) levels, would trade at a greater than 10 percent discount to the sector.