Record Gucci sales help Kering bag 31% rise in revenues
Results reflect changing fortunes for luxury goods sector
The appetite for Gucci’s strand of vibrant eclecticism is showing no sign of waning and has propelled both the brand and its parent company Kering to record sales in the first three months of this year.
Luxury house Kering, which also owns Balenciaga and Yves Saint Laurent, said on Tuesday after the market closed that revenues were up 31.2 per cent in the first quarter to €3.57bn, lifted by a 34 per cent jump in sales. This was a new quarterly record for Kering.
The growth was driven by double-digit increases across its product categories, including “ever-increasing demand for ready-to-wear and shoes”, as well as “excellent momentum” in leather goods, according to Kering.
Gucci led the way, posting record revenue growth of 51.4 per cent to €1.35bn for the three months, with strong performance from all regions and product categories.
It is the latest iteration of a startling turnround that began in December 2014 when Alessandro Michele, an unknown accessories designer at the brand, was elevated to the role of creative director.
The results come amid changing fortunes for the luxury goods sector. After a couple of difficult years hurt by slowing Chinese consumption and less tourism in Europe, performance began to improve in the middle of last year.
Crucially, Chinese demand, which accounts for one in three luxury purchases, recovered in the second half, even if Chinese consumers are choosing to spend more domestically than abroad.
Luca Solca, luxury goods analyst at Exane BNP Paribas, described Kering’s results in a note as a “phenomenal beat” that “is beyond the rosiest buyside expectations” and is likely to “push the share price to new heights”.
Yves St Laurent was not far behind Gucci, with revenue growing 35.4 per cent during the quarter due in part to the warm reception shoppers have given to the brand’s summer collection designed by Anthony Vaccarello, the Belgian designer tapped last year to serve as its creative director to replace Hedi Slimane.
Meanwhile, at Puma, the sports and lifestyle brand that is a perennial topic of takeover speculation, revenues grew 17.9 per cent year on year. This month, Kering chief executive François-Henri Pinault relinquished his post as vice-chairman of Puma’s board of directors, prompting renewed suggestions that Kering may look to divest the brand imminently.
At Gucci, the 95-year-old Italian luxury house was reeling from two years of declining sales and the ousting of its chief executive and creative director when Mr Michele was appointed by chief executive Marco Bizzarri to lead its creative reinvention.
Mr Michele’s creative vision, which at Gucci’s AW17 show included 120 looks that were rich in diverse historical references, embellishments and colours — has translated into sales.