Kering Sees Q1 Revenues ‘Bounce Back’ Above Pre-Pandemic Levels
PARIS — Gucci’s new “always on” strategy kicked into high gear in the first quarter, allowing Kering’s star brand to return to positive growth with a steady stream of retail activations, capsule collections, collaborations, clienteling efforts and digital storytelling.
Gucci revenues in the first three months of 2021 improved 24.6 percent in organic terms versus the first quarter of 2020 to 2.17 billion euros.
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Organic sales at the Italian megabrand had dipped 10.3 percent in the fourth quarter, spooking investors.
“We are very happy with the execution of the strategy at Gucci, and the performance so far has delivered,” Jean-Marc Duplaix, chief financial officer at Kering, told analysts on Tuesday. “Many initiatives are now in place to fully leverage the potential of the brand.”
Collaborations with The North Face, Ken Scott and manga character Doraemon were among projects that boosted Gucci’s fortunes in the first quarter and Duplaix said the brand would keep up the pace in 2021. He touted the imminent arrival of products from Alessandro Michele’s Ouverture collection, the Bamboo handbag model and, toward the bottom half of the year, the Aria collection with its mash-up of the brand’s equestrian roots, Tom Ford-era designs and creative hacking of silhouettes and logos from sister brand Balenciaga.
“This is exactly the kind of thing Gucci should do — in our opinion — to reignite young Chinese interest for the brand,” Bernstein luxury analyst Luca Solca said in a research note, giving a thumbs-up to the Balenciaga stunt.
Grilled by analysts for minutiae about Gucci’s performance, Duplaix eventually fessed up that the brand enjoyed triple-digit growth in China in the quarter.
Fueled by high double-digit momentum in Asia-Pacific, and also North America, overall Kering revenues bounced back above pre-pandemic levels, up 5.5 percent versus the first quarter of 2019.
Consolidated revenues at the French luxury group, also the parent of Alexander McQueen, Bottega Veneta, Boucheron and other brands, rose 25.8 percent on a comparable basis to 3.89 billion euros in the first quarter.
François-Henri Pinault, chairman and chief executive officer of Kering, trumpeted a strong top-line performance.
“Growth was consistent across all of our houses, and we are particularly pleased with Gucci’s momentum as the brand kicks off its centennial celebration,” he said in a statement revealing the results, released after the closure of the Paris bourse. “While 2021 should still face some impact from the health crisis, the strategy, positioning and creativity of our houses will enable each one of them to thrive in today’s environment.”
By comparison, organic sales at LVMH Moët Hennessy Louis Vuitton’s key fashion and leather goods division rose 52 percent year-over-year in the first quarter, reflecting the resilience of its star brands Louis Vuitton and Dior. Compared with 2019, the division’s revenues were up 37 percent, a figure the financial community is likely to focus on as evidence of the luxury segment’s strength.
During the call, Duplaix touted that all Kering brands posted revenues above the first quarter of 2019 in direct retail sales, but it did not say how much for Gucci.
Part of Gucci’s woes last year stems from its decision to accelerate a new strategy that involves cutting back its wholesale network, and switching investment from a handful of high-profile fashion shows to a speedier pace of digital storytelling and events.
Solca noted that Kering’s smaller brands all did better than Gucci in beating sell-side consensus.
Organic sales in the first quarter rose 23.4 percent at Saint Laurent, 24.6 percent at Bottega Veneta, and 33.1 percent at “other houses.” Of the latter, Kering highlighted “outstanding” growth at Alexander McQueen and Balenciaga; cited an “excellent quarter” for jewelry houses, which include Pomellato and Qeelin, and described “a good start to the year” for watch brands Ulysse Nardin and Gerard-Perregaux.
Duplaix highlighted that Bottega Veneta logged the highest quarter in its history, up 35 percent versus the first quarter of 2019, with all categories positive and men’s wear now fully aligned with the new aesthetic of creative director Daniel Lee.
At Saint Laurent, e-commerce sales more than doubled in the quarter, and “carryover handbags” sold up a storm, Duplaix noted.
By region, sales surged 83 percent in Asia-Pacific, driven by mainland China, and 46 percent in North America.
In Western Europe, sales were down 34 percent in the first quarter, reflecting a lack of tourists, lockdowns in many countries and related store closures. About 55 percent of Kering’s retail network was dark in the first quarter versus less than 34 percent in the last quarter of 2020.
Revenues in Japan were down 3 percent, reflecting a lack of tourists, Duplaix noted.
The online channel rocketed 108 percent to represent 14 percent of Kering’s retail sales. The highest growth in digital purchasing occurred in Asia-Pacific and North America.
Duplaix cited “quite a strong start of Q2” but steered clear of giving any clear predictions.
“We are still in a very uncertain environment,” he said. “While we are not out of the woods, we are confident in our houses’ ability to succeed in 2021 and beyond.”
Hermès International is the next big luxury player scheduled to report first-quarter results, on Thursday.
See also:
Exploring the Gucci/Balenciaga Tie-up
How Kering Plans to Fix Gucci in 2021
How Louis Vuitton and Dior Are Crushing the Competition
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