Kering Sales Gain 2.7 Percent in Q1

Boosted by new creative direction at its cash-cow luxury brand Gucci and good momentum at Puma, sales at Kering rose 2.7 percent in the first quarter to 2.7 billion euros, or $2.97 billion.

On a comparable basis, sales were up 4 percent in the period.

Kering’s luxury activities saw revenues rise 2.8 percent to 1.8 billion euros, or $1.98 billion, lifted by brisk activity in Western Europe and Japan, while the sport and lifestyle division registered a 2.6 percent increase to 913 million euros, or $1 billion.

All dollar rates are calculated at average exchange rates for the period concerned.

On a comparable basis, luxury was up 2.6 percent, with Gucci logging a 3.1 percent gain, while sport and lifestyle rose 7 percent, helped by an 8.1 percent increase at Puma.

The difference between comparable and reported growth is attributable to negative foreign exchange rates in emerging countries, the company said.

Saint Laurent again saw double-digit increases, up 27.3 percent in the quarter.

Sales at Bottega Veneta, meanwhile, were down 7.6 percent, or 8.3 percent on comparable terms, to 267 million euros, or $294 million, as the brand continues to shift its focus to local consumers and new leather-goods lines.

François-Henri Pinault, Kering’s chairman and CEO, called it a “solid first-quarter 2016 performance in a challenging market environment [that] bears testimony to our focus on driving organic growth.”

He added: “The new creative energy is maintained at Gucci and the brand’s new collections continue to draw an enthusiastic response. We are confident that we can extend our growth trajectory over the full year thanks to our multibrand model, our continued strict operating and financial discipline, and the top-quality work of all our teams.”

In a note to investors, Barclay analysts said Kering remained its “favored investment in the soft luxury space due to a reinvigoration of Gucci driven by the new creative director Alessandro Michele. With Gucci accounting for 55 percent of group earnings before interest and taxes — momentum in this brand outweighs the concerns on Bottega Veneta [with the brand suffering from its Asian focus and skewed towards a weak high-end handbag category] and the creative director changes at Saint Laurent. Puma is also performing well in a growing market, we expect a good year relative to the weak-performing luxury sector.”

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