Kering buoyed by resilient sales growth at luxury star Gucci
today Oct 23, 2018
Demand for Gucci handbags proved more resilient than expected in the third quarter, helping to drive a strong revenue rise at the Italian brand's parent Kering at a time of heightened investor nerves over luxury goods companies.
Manufacturers of high-end goods are in the spotlight as concerns grow over a trade spat between China and the United States and whether it will curb demand, after sparking a Chinese stock market selloff and falls in the yuan.
Kering has also been under scrutiny over how long its star brand Gucci, riding high after a flamboyant makeover under designer Alessandro Michele, can keep pulling in shoppers at a breakneck pace.
Gucci trumped forecasts yet again, however, with comparable revenue growth coming off recent quarterly highs of over 40 percent but far exceeding analyst forecasts at 35.1 percent in the third quarter.
That helped drive a better-than-expected sales momentum at Kering overall, offsetting a worsening situation at Bottega Veneta, which is in turnaround mode and brought in a new designer, Daniel Lee, in June.
Healthy appetite from Chinese consumers contributed to Gucci's performance and that of other brands, Kering's financial director Jean-Marc Duplaix said, adding that investor worries about the industry may be overdone.
"Markets look at the worst case scenario without carefully looking at the trends," Duplaix told journalists, adding that demographics in China for example were very encouraging.
Kering's key brands performed better in the third quarter in continental China than at other points this year, Duplaix added.
Kering shares closed down 3.79 percent on Tuesday before the sales figures were published, after falling just over 30 percent since hitting record highs in mid-June.
Like peers including Louis Vuitton owner LVMH , Kering is among the luxury groups that has so far benefited the most from an industry rebound fuelled by young, middle class Chinese customers spending on high-end goods at home and overseas.
Kering's revenue reached 3.4 billion euros ($3.90 billion) in the July to September period, and increased 27.5 percent on a comparable basis.
© Thomson Reuters 2019 All rights reserved.