- Gucci’s second-quarter sales rise 7.4%, helped by new products
- Bottega Veneta hurt by reduced tourism in Western Europe
French luxury-goods maker Kering SA reported first-half earnings that beat analysts’ estimates on rising demand for Gucci loafers and Yves Saint Laurent fashions, helping it shrug off lower tourism in Europe.
Operating profit rose 4.9 percent to 811 million euros ($899 million), excluding one-time items, Kering said in a statement Thursday after European markets closed. Analysts expected 796 million euros. Second-quarter sales rose 6.9 percent, excluding currency shifts, acquisitions and disposals, besting the 3 percent gain anticipated by analysts.
Gucci Chief Executive Officer Marco Bizzarri and creative director Alessandro Michele have turned around the Italian luxury brand, helping it overcome a slowdown in China, the strong dollar and terrorist attacks in Europe. Gucci posted a 7.4 percent sales increase in the quarter, fueled by gains in Western Europe and a rebound in emerging markets.
“Gucci’s second quarter smashes expectations,” said John Guy, an analyst at MainFirst Bank AG. “New products, increased full price sell-through and an engagement with a more diversified and younger consumer base we believe is driving the better-than-expected Gucci sales momentum. That has helped the brand overcome the malaise across the luxury sector.”
New Gucci products made up about 70 percent of the brand’s sales in the second quarter, Chief Financial Officer Jean-Marc Duplaix said on a conference call with analysts. He added that the brand will aim to gradually increase that portion to 90 percent in stores by the end of the year as almost all categories will have been revisited by then. He also said that while raising prices at Gucci is not an objective, continued upgrading of the brand will lead to an increase of the average selling price.
Bottega Veneta, which generates about one-fifth of Kering’s operating profit, is particularly affected by the slowdown of tourism because about three-quarters of the brand’s sales are to Asian buyers, according to Loic Morvan, an analyst at Bryan Garnier & Co. The label’s comparable sales fell 9.8 percent in the quarter, Kering said, with performance “heavily weighed down by lower tourism in Western Europe.”
Kering’s shares rose 0.4 percent to 160 euros in Paris Thursday.