Kering Shares Fall in Paris as Gucci Holds Back Revenue

Kering SA shares fell the most in three months as the French luxury-goods maker said measures aimed at making the Gucci brand appear more exclusive and weaker spending by Chinese consumers weighed on revenue growth.

Gucci’s third-quarter sales fell 1.9 percent on a comparable basis, Paris-based Kering said yesterday after European markets closed. Analysts predicted a 0.5 percent drop. The shares slid 4.8 percent to 146.25 euros at 2:55 p.m. in the French capital.

Fewer Chinese tourists have been shopping in Hong Kong because of pro-democracy protests, while the closure of some wholesale accounts and the introduction of more-expensive products have also weighed on Gucci’s revenue. Worldwide sales of personal luxury goods will rise 2 percent this year, the slowest pace since 2009, Bain & Co. estimated this month.

“Management continues to call for a progressive return to positive like-for-like growth at Gucci, but short-term uncertainties persist and there is limited visibility on the timing of this recovery story,” said Luca Solca, an analyst at Exane BNP Paribas.

Gucci contrasts with Kering’s Puma sporting-goods brand, whose quarterly revenue rose 6.2 percent as it benefited from a marketing campaign featuring sprinter Usain Bolt and soccer player Mario Balotelli. Analysts predicted a 3 percent gain.

Remaining Vigilant

Kering’s total third-quarter revenue climbed 3.3 percent to 2.6 billion euros ($3.29 billion). Analysts predicted 2.59 billion euros, according to the median of 17 estimates compiled by Bloomberg. Sales rose 4.4 percent on a comparable basis.

“Luxury activities held firm in a complex economic environment, thanks to a strong sales uptrend in our network of directly operated stores,” Chief Executive Officer Francois-Henri Pinault said in the statement. “Faced with uncertain market conditions, we remain vigilant.”

Kering, which this week named new CEOs at the Bottega Veneta, Brioni and Christopher Kane brands, said in July that operating performance would improve in the second half of 2014 and it forecast a return to positive revenue trends, including at Gucci. Luxury-goods makers including LVMH Moet Hennessy Louis Vuitton SA have recently reported softer demand.

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