Gucci’s Record Sales Propel French Luxury House Kering

  • Label’s sales rose 21% in fourth quarter, trouncing rivals
  • Designer Alessandro Michele reignites interest in key brand

Gucci’s $2,000 Sylvie leather shoulder bags and $1,190 studded leather pumps are flying off the shelves, propelling parent company Kering SA to its fastest sales growth in four years and further lifting spirits in the hard-hit luxury-goods industry.

The Italian fashion brand’s revenue advanced 21 percent in the fourth quarter, almost twice as fast as analysts expected, Kering said Friday. Full-year sales at the business, Kering’s largest, exceeded 4 billion euros ($4.3 billion) for the first time as creative director Alessandro Michele reignited interest in the label. The shares rose 2.6 percent to 230.15 euros at 10:48 a.m. in Paris.

“Knockout numbers at Gucci,” wrote Mario Ortelli, an analyst at Sanford C. Bernstein. “We expect the turnaround to maintain good speed for at least the first few months of 2017 as Alessandro Michele-designed merchandise continues to be phased-in and as the brand momentum continues to trickle from the fashion elite to the broader luxury consumer.”

Gucci Chief Executive Officer Marco Bizzarri’s efforts to reorganize management, cut the number of products and change everything from packaging to store design have paid off. He bet on Michele, a relatively unknown designer who started in Gucci’s design office in 2002, appointing him creative director in 2015. Michele has focused on vintage styling and brought buzz back to the brand with his first collection that featured pleated red leather skirts and sheer pussy-bow blouses.

Kering follows peers LVMH, Burberry and Hermes as the latest luxury-goods company to report improvements in Asia and Europe. The BI Europe Luxury Goods Top Peers index has jumped 8 percent this year, amid signs that appetite for expensive handbags, silk scarves and timepieces is rebounding. The industry had grappled with ebbing demand in China and a slowdown in tourism in Europe after terrorist attacks.

Gucci’s growth was in contrast to Kering’s Bottega Veneta brand, where sales dropped 9.4 percent in 2016. The company, which in September appointed former Hugo Boss chief Claus-Dietrich Lahrs to lead a revival, said the decline began to ease in the fourth quarter.

Other highlights included:

  • Yves Saint Laurent’s sales rose more than 20 percent for a sixth straight year
  • Kering sales rose 8.1 percent on a comparable basis to 12.4 billion euros in 2016, beating the 12.3 billion-euro analyst estimate
  • Recurring operating income was 1.89 billion euros
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