“We are extraordinarily proud of the remarkable performances Kering delivers quarter after quarter,” François-Henri Pinault, Chairman and Chief Executive Officer of Kering, said in a statement on Tuesday. “Our growth, whose pace is unprecedented in the Luxury sector, is sound, well balanced and sustained across all regions and distribution channels.” His statement comes as Kering – the Paris-based conglomerate that owns Gucci, Balenciaga, Saunt Laurent, and Bottega Veneta, among other brands – posted its third quarter results, revealing a better-than-expected revenue rise in revenue, driven in large part, of course, by Gucci.
According to Kering’s report, total revenue for the third quarter is up 27.1 percent compared to the same July to September period of last year, with revenues reaching $3.90 billion. It highlighted the “excellent performance of Gucci,” which is up 35.1 percent on a comparable basis, “across all distribution channels, regions and product categories” as a key driver of growth.
On a country-by-country basis, Gucci’s retail sales “increased in all regions, led by Asia Pacific (up 41.9 percent on a comparable basis) and North America (up 40.7 percent on a comparable basis).” As for e-commerce, it is up by nearly 70 percent, while wholesale was up 36.3 percent on a comparable basis.”
Saint Laurent experienced “robust 16.1 percent growth in sales” – double-digit growth in all regions – on a comparable basis. It will be interesting to see how Saint Laurent under the creative director of Anthony Vaccarello fares in coming quarters; the brand is currently in an arguably precarious position given former creative director Hedi Slimane’s debut at LVMH-owned Celine. Slimane, who was known for his skinny rocker aesthetic at YSL, is currently showing very similar design for Celine, giving Saint Laurent (and its design team, which still consists of several key Hedi Slimane-era design figures) a run for its money.
The July to September quarter would not be expected to reflect any potential impacts – since Slimane only just showed his first collection for Celine early this month – but coming quarters should be telling.
In light of Kering’s Q3 report, it is worth wondering how long the smash-and-grab success that is Alessandro Michele’s Gucci - the marquee brand under Kering’s umbrella - will last. Gucci’s 35 percent growth figure is “its weakest quarter of sales growth in nearly two years, signaling that a run of buoyant revenue expansion at the Italian fashion house is coming to an end,” per WSJ.
While the prices of luxury brands’ stocks are currently being hit “by concerns that slowing economic growth in China and an escalating trade dispute between Beijing and the Trump administration could prompt a pullback by China’s big spenders,” Gucci’s slowing growth rate may be more personal than the industry’s larger issues. After all, the Q3 report follows from a warning early this month from Gucci chief executive officer Marco Bizzarri over what Reuters describes as “a looming slowdown in the pace of sales growth after a revenue explosion at the Kering.” Reuters reported that “Bizzarri said in a message to store employees they should not be daunted by any sign of a slowdown or variations in daily performances, which he said would be normal after rapid growth and at a time when year-ago comparisons are growing tougher.”
In terms of revenue breakdowns by individual brand, Kering revealed that for the three month period between July and September 2018, Gucci brought in $2.41 billion. Saint Laurent saw nearly $513 million in revenues. It was $297.2 million for Bottega Veneta, and $592.8 million for Kering’s “other houses” combined, including Alexander McQueen and Balenciaga.