Apr 17, 2019
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Kering's Gucci and Saint Laurent stay strong, Bottega dips but early Daniel Lee product is a hit

Apr 17, 2019

Strong demand for Gucci’s maximalist collections helped parent Kering beat first-quarter revenue forecasts on Wednesday, even as the pace of growth at the Italian fashion label cooled from the explosive levels of the last two years.

Photo: Gucci - Gucci

Kering, which also owns fast-growing Saint Laurent and Balenciaga, relies heavily on Gucci for the biggest slice of its sales and profits, drawing scrutiny over whether it can keep up momentum at the label following its revamp under designer Alessandro Michele.

The group, run by billionaire boss Francois-Henri Pinault, has said Gucci will naturally expand at a less breakneck pace over time after it more than doubled in size over the past four years, with annual sales reaching more than €8 billion (£6.9 billion).

In the first quarter, Gucci’s comparable revenue, which strips out the effect of currency swings, rose 20%, down from 28% three months earlier, and nearly 50% at the start of 2018.

That still beat the pace at rivals including LVMH’s Louis Vuitton, keeping it among the luxury industry’s clear winners at a time when some are profiting more than others from strong Chinese demand.

“Markets have already anticipated a form of normalisation [at Gucci], and we are very serene about it,” Kering Financial Director Jean-Marc Duplaix told journalists.

Gucci is adding to its product lines with items like homewares and by branching out into cosmetics as part of plans to keep growing.

At group level, Kering reported a 21.9% rise in first-quarter revenue to €3.8 billion, or up 17.5% on a comparable basis stripping out currency swings and the effect of acquisitions, a touch above analyst forecasts.

It saw a "very solid start to the year" for Yves Saint Laurent (up 17.5% on a comparable basis), with "balanced growth" across all regions as both ready-to-wear and accessories proved popular.

Comparable sales slid 8.9% at Kering’s Bottega Veneta however. The brand is in the midst of a reinvention under creative chief Daniel Lee. His main designs will land in stores halfway through 2019 but Duplaix said a few limited early pieces had seen "considerable" success. “From the second half of the year we should see an inflection point, but it will be gradual,” Duplaix added.

Meanwhile, the group saw "very strong momentum" at its Other Houses (up 21.7% on a comparable basis), powered by Balenciaga and Alexander McQueen, and solid performances in Watches and Jewelry.

In an encouraging sign for some rivals with a strong presence in mainland China, Duplaix added that demand there had shown no sign of slowing, though Chinese customers were starting to spend more at home and less overseas.

Additional reporting by Sandra Halliday

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