Kering generated revenue of 5.1 billion euros ($5.60 billion) during the first three months of the year, up 2 percent as reported and 1 percent on a comparable basis, with chairman and CEO François-Henri Pinault calling the Q1 performance “mixed” and noting that the group is working to “augment the desirability of our brands and raise their profile in key markets.” The French group highlighted a 4 percent rise in revenue from its directly operated store network, “with all Group Houses contributing to the growth.” Geographically speaking, Kering pointed to “good momentum in Western Europe and Japan,” noting that while revenue was down in N. America, it saw “resumed growth in Asia-Pacific due to the gradual recovery of the Chinese market.” And in terms of distribution, revenue dropped by 10 percent in a nod to the group’s continued efforts to boost exclusivity by chipping away at the share of wholesale sales.
Gucci – In terms of its individual brands, the biggest name under the Kering umbrella, Gucci, generated revenue of 2.6 billion euros ($2.85 billion), an increase of 1 percent both as reported and on a comparable basis. Bernstein analyst Luca Solca stated in a note on Tuesday that “Gucci hasn’t produced a negative surprise, coming in at +1 percent (against consensus expectations of 0 percent),” asserting that while Kering’s results are “still significantly behind what LVMH has done in its Fashion and Leather Goods division (+18 percent in Q1) and what Hermès has produced overall (+23 percent), the market knows Gucci is in transition, and is prepared to wait for new creative director – Sabato De Sarno – to step in and reignite consumer interest for the brand.”
In the meantime, Kering says that revenue from all of Gucci’s key product categories was up, “in particular handbags, the Valigeria collection of travel accessories, and women’s ready-to-wear.” And it saw its average unit retail (“AUR”) – i.e., the average selling price for an item within a specific period – increase across all categories.
Yves Saint Laurent – YSL had “a good start to the year,” per Kering, with revenue of 806 million euros ($885 million), up 9 percent as reported and 8 percent on a comparable basis – beating analysts’ consensus of 6 percent. “Sales in the directly operated store network rose 14 percent on a comparable basis, fueled by outstanding performances in leather goods and ready-to-wear, together with the success of the House’s elevation strategy,” Kering reported. In a note on the latter point, Kering also “confirmed traction on higher price points” for Saint Laurent.
Bottega Veneta – Bottega’s Q1 revenue that was “stable year-on-year” at 395 million euros ($433 million). Kering noted that wholesale revenue was down 14 percent on a comparable basis for the brand, “reflecting the accelerated optimization of this channel.” AUR was “up sharply.” And looking ahead, Kering says that the brand’s “value-driven strategy [is] ongoing” and “heightening brand visibility in China” is a priority.
Other Houses – And as for its “Other Houses,” namely, Balenciaga, Alexander McQueen, Brioni, and its jewelry brands, revenue reached 890 million euros ($976 million) in the first quarter, down 9 percent as reported and on a comparable basis. “Trends at Balenciaga and Alexander McQueen were positive,” according to Kering. “Brioni’s sales were excellent, and the performance of Kering’s Jewelry Houses was outstanding.” Solca notes that “it is clear that Balenciaga is pay[ing] the price of recent social media problems.”