Kering Sales Growth Surges Past EstimatesBy
All divisions beat estimates, Bottega Veneta returns to growth
Company in ‘particularly good position’ for balance of year
Kering SA’s first-quarter revenue far exceeded analysts’ estimates as the Gucci and Saint Laurent brands turned in industry-leading growth and declines reversed at Bottega Veneta.
Comparable sales increased 28.6 percent from a year earlier, the Paris-based fashion group said Tuesday after markets closed, compared with the 13.3 percent rise anticipated by analysts. Gucci provided the standout performance with a 48 percent gain, the strongest quarterly growth in more than 20 years.
As rebounding demand in China and a revival of European tourism have boosted luxury brands, the revamp of Gucci and runaway growth at Saint Laurent have helped Kering sales outpace the company’s most formidable peers. The first-quarter gains clearly surpassed those of competitors including LVMH, whose billionaire owner Bernard Arnault on Tuesday moved to consolidate control over Christian Dior for about 12.1 billion euros ($13.2 billion).
“Kering delivered a spectacular start to the year,” said Zuzanna Pusz, an analyst at Berenberg. The performance showed “both the strong momentum of the Kering brands as well as the favorable luxury goods environment.”
The strong sales could provide a further boost to Kering’s share price, which gained 1.2 percent to a record in Paris on Tuesday and is up 72 percent in the past year.
“In a climate of persistent geopolitical and macroeconomic uncertainties, our first quarter puts us in a particularly good position for the balance of the year,” Kering Chief Executive Officer Francois-Henri Pinault said in the statement. The first quarter benefited from “somewhat more favorable market conditions,” he added.
Gucci was the quarter’s standout performer. The label’s CEO Marco Bizzarri and creative director Alessandro Michele have reinvigorated the brand, Kering’s largest, with a whimsical new product offer and raised its profile online.
“Gucci’s success is about higher store traffic, higher desirability in the brand,” Kering Chief Financial Officer Jean-Marc Duplaix said on a conference call.
Yves Saint Laurent’s comparable revenue climbed 33 percent. Waiting lists at the label are reportedly mounting for items from the first collection by new artistic director Anthony Vaccarello, which arrived in stores in January. The collection “remained faithful to the DNA of Saint Laurent,” but also included hot new bestsellers, Duplaix said.
Bottega Veneta surprised analysts by returning to growth. Sales gained 2.3 percent on a comparable basis. Shoes, especially women’s models, remained in high demand, the company said.
In addition to the rapid growth in its core luxury brands, Kering benefited from a turnaround at German sports-apparel maker Puma SE, which reported its highest-ever quarterly sales earlier on Tuesday.
Kering’s total first-quarter sales climbed 31 percent to 3.57 billion euros, beating the 3.16 billion euros predicted by 16 analysts in a Bloomberg survey.
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