Kering shares hit 15-year high on bumper third quarter
French luxury group gets ‘its mojo back’ as Gucci revamp spurs revenue increase
Shares in Kering soared to their highest in more than 15 years after the French luxury group reported bumper third-quarter earnings helped by the successful makeover of its dominant Gucci brand.
Sales at the group behind Gucci, Yves Saint Laurent and Puma jumped 10.5 per cent on an organic basis — which strips out exchange rate fluctuations — in the quarter to September 30, far exceeding analysts’ forecasts of a 7 per cent rise.
Gucci, the Italian fashion house which sells products such as python handbags for €4,500 and spiked metallic leather sandals for €1,590, posted a 17 per cent rise in sales in the quarter, bucking a wider trend of depressed luxury goods sales.
The strong performance comes under the new creative direction of Alessandro Michele, who was appointed to Gucci in January last year following the exit of Frida Giannini. His new collections have been credited with revitalising the brand.
“Gucci has got its mojo back,” said Carole Madjo, analyst at Haitong Research, in a note following the results on Wednesday. “Growth should continue thanks notably to the increasing penetration of Gucci’s new offer.”
The results provide a welcome ray of light in the luxury sector. Upmarket fashion labels have been struggling under the shadow of slumping sales in once popular shopping destinations such as Hong Kong and Macau, and weak tourism in Europe following a spate of terror attacks over the past year.
Kering was not entirely immune to these effects. The group’s Bottega Veneta brand continued to suffer in the latest quarter — sales fell 10.9 per cent on a comparable basis — amid weak tourism in western Europe as well as Japan.
But this was more than made up for by the other brands. Sales at Yves Saint Laurent rose 34 per cent while revenues at Puma — which makes running shoes for Olympic champion Usain Bolt — rose 10.8 per cent during the quarter.
Analysts said the results were a positive sign for the upcoming and all-important Christmas shopping season.
Rogerio Fujimori of RBC Capital Markets said: “It does not get better than this for Gucci and Saint Laurent.” He added: “For the luxury sector, this is another example of current trading picking up as we get closer to the key festive season.”
Other luxury-goods makers have been having a harder time. While Burberry reported a modest rise in quarterly sales last month, Richemont, the maker of Cartier, said in September that first-half earnings would fall about 45 per cent. That same month, Hermes abandoned a long-term sales growth target.
Shares in Kering were trading 8.9 per cent higher at €205.35 early on Wednesday afternoon to their highest since early 2001, when the company was known as Pinault-Printemps-Redoute.