September 23, 2023

Gross sales at French luxurious group Kering rose by simply 1 p.c within the first quarter, as star label Gucci benefited lower than rivals from a rebound in China, and revenues fell sharply within the US.

Kering’s gross sales got here in at €5.08 billion ($5.58 billion) for the three months to end-March.

The rise in comparable gross sales, which strip out the impact of forex fluctuations and acquisitions, was bang in step with analyst expectations.

However the tempo of development was properly beneath that of opponents — Louis Vuitton proprietor LVMH grew gross sales by 17 p.c and Birkin bag maker Hermès by 23 p.c over the identical interval — and got here after a 7 p.c decline within the final quarter of 2022.

“Kering’s efficiency within the first quarter remained combined,” chairman and chief government officer François-Henri Pinault stated in a press release, noting that tendencies had improved through the interval.

Within the Asia Pacific area, which is dominated by China and the place Kering final 12 months made a 3rd of its gross sales, retail revenues grew by 10 p.c as the top of Covid-19 lockdowns introduced consumers again into shops.

Within the US, the place LVMH had already flagged a slowdown for style and leather-based items as youthful, much less rich consumers splurge much less on luxurious as inflation bites, retail gross sales fell by 18 p.c. The US market accounted for 27 p.c of Kering’s complete gross sales final 12 months.

Gucci, as soon as luxurious’s fastest-growing model and the group’s fundamental revenue and income driver, has been slowing down markedly lately and its inventive director Alessandro Michele left final November.

His successor, little-known Sabato De Sarno, will be part of the group subsequent month and current his first style present in September in Milan, leaving Gucci prone to shedding extra momentum in gross sales and margins within the coming months as his collections won’t hit the shops earlier than subsequent 12 months.

“We can not regain massively market share in a couple of weeks,” finance chief Jean-Marc Duplaix informed analysts, saying the group was specializing in transferring Gucci extra upmarket, together with by opening salons for the ultra-rich the place costs begin at $40,000.

“All of the initiatives that we’re pushing now won’t repay instantly.”

Whereas smaller model Yves Saint Laurent reported 8 p.c development through the interval, the group’s different labels suffered.

Bottega Veneta’s gross sales have been flat, whereas Kering’s “different homes” division — which incorporates Balenciaga, nonetheless reeling from a client backlash within the US and Britain over adverts that includes youngsters — noticed a 9 p.c decline in revenues.

By Silvia Aloisi and Mimosa Spencer; Editor Mark Potter

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Can Kering Get Again On Observe?

Gucci’s gross sales dropped 15 p.c through the fourth-quarter whereas scandal-mired Balenciaga additionally stalled. Nonetheless, shares rose as buyers rallied behind a bullish outlook for China.