Kering Boasts "Outstanding Growth," Makes Little Mention of Balenciaga, Brioni

A day after LVMH released its first-half earnings report, boasting an increase in revenue despite an otherwise “cautious” outlook, rival Kering has reported “outstanding revenue growth in the first half” and “clearly outperforming the sector,” per François-Henri Pinault, Kering’s Chairman and Chief Executive Officer.

The Paris-based conglomerate, which owns Yves Saint Laurent, Gucci, Balenciaga, Bottega Veneta, Brioni, and Stella McCartney, among a handful of other hands, says it observed “remarkable performances in all regions of the world and across all of our activities,” which Pinault says “underscores Kering's ability to innovate, create value, and gain market share.”  

To be specific, Kering reported revenue for the first half of 2017 of €7,296.2 million, up a sharp 28.2% from the same period last year. It cites, “sustained growth momentum at Gucci and Saint Laurent, both in revenue (up 43.4% and 28.5%, respectively, on a comparable basis),” as helping to drive sales.

What About Balenciaga and Brioni?

While Kering boasts cold hard numbers for its biggest brands, it makes little mention of the performance of others, such as Balenciaga. Of the Demna Gvasalia-helmed brand, the report merely states, "Balenciaga achieved a particularly remarkable performance in the first half, with growth in directly owned stores accelerating in all regions and across all product categories."

In a later portion of the report, it states that there is a "good level of profitability at Balenciaga." 

But before we write this off as their way shielding poor performance, it is worth noting that the exclusion of precise numbers regarding Balenciaga's revenue growth is not to be interpreted as a loss on behalf of that brand. While the current report - and ones that predate it - do not highlight any specific growth for Balenciaga, that is likely because Kering is only required by French financial guidelines to disclose the revenue results of its biggest brands (Gucci, Yves Saint Laurent, and Bottega Veneta). 

So, as for how well Balenciaga is actually doing, that remains a bit of a mystery. We do know that Kering lumps its non-Gucci, YSL, and Bottega Veneta fashion brands within the “other luxury brands” category, for which the sales for the first half of the year rose by 10.1% compared to the same period last year. Within this category, Balenciaga's performance is described as "particularly remarkable." 

Kering's report also notes that Balenciaga's growth is being "driven by enthusiasm for RTW and Shoes, both Men’s and Women’s." Another hint: Its capital expenditures - funds used by a company to acquire or upgrade physical assets such as property, industrial buildings or equipment - are up, which Kering attributes to "expansion plans at Balanciaga." 

With that in mind, it appears that Balenciaga - and its sock boots and oversized bags - are doing just fine under the watch of Gvasalia, and that if there is a brand to worry about, it is more likely Brioni, which is in the midst of a transition after buyer/street style star Justin O'Shea served a six-month stint as creative director before getting the boot, and Maison Margiela veteran Nina-Maria Nitsche (who joined Vetements in September 2016 but left when the company relocated to Zurich from Paris earlier this year) was appointed in June.

According to Kering's report, while a "focus on core categories and retail execution is paying off [for Brioni]," that brand's "results [are] still under pressure."

Ideally, a new direction under Nitsche (the date for her debut has not yet been confirmed) and the repositioning that is under way thanks to Brioni’s new chief executive officer Fabrizio Malverdi, who was appointed this past March, will bring some much need appeal and stability to Brioni. That, however, is yet to be seen. Stay tuned.