Kering Sales Trail Estimates as Gucci Demand Wanes in ChinaAndrew Roberts
Kering SA reported third-quarter revenue that trailed estimates as demand for Gucci handbags waned in China, leading the luxury goods brand to post its weakest growth in four years.
Sales from continuing operations fell 1.5 percent to 2.52 billion euros ($3.48 billion), Paris-based Kering said today in a statement after markets closed. Analysts predicted 2.55 billion euros, according to the median of 14 estimates compiled by Bloomberg. Excluding acquisitions and currency fluctuations, revenue rose 3.4 percent, the company said.
Kering follows LVMH Moet Hennessy Louis Vuitton SA in reporting slowing growth as Gucci and LVMH’s Louis Vuitton brand tighten distribution and raise prices in an effort to appeal to the wealthiest shoppers. Gucci’s comparable sales advanced 0.6 percent in the third quarter, compared with analyst estimates of 2.1 percent growth. That was the weakest performance since the third quarter of 2009 when sales fell 7 percent.
Kering’s performance confirms luxury growth is moderating in the second half of the year, Luca Solca, an analyst at BNP Paribas in London, said by e-mail. Gucci missed “because of the need to streamline wholesale,” he said.
Kering fell 1.1 percent to 172.65 euros in Paris trading today, trimming the gain this year to 25 percent.
The adoption of a more exclusive strategy “adversely affected third-quarter store traffic” for Gucci in the Asia Pacific region, Kering said. The brand’s sales in China fell in the period, Chief Financial Officer Jean-Marc Duplaix said on a call with reporters, declining to specify the drop.
Louis Vuitton sales grew less than 3 percent between July and September on an organic basis, LVMH said last week.
Sales at the rest of Kering’s luxury division, which includes Bottega Veneta, Saint Laurent and Balenciaga, also trailed estimates on a comparable basis.
The Puma sporting-goods brand performed better than expected as comparable sales declined only 0.8 percent in the quarter, compared with the 2.3 percent slide predicted by analysts. Puma sales developed positively in North America, though remained under pressure in western Europe, Kering said.