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Gucci Records Strongest Revenue Growth in Two Decades, Propels Kering

A stellar performance by Gucci helped to fuel a 31.2 percent jump in revenues at parent company Kering in the first quarter, providing further evidence of a sharp rebound in luxury sales after a year hit by falling Chinese demand and political instability.

Sales totaled 3.57 billion euros, or $3.81 million, in the three months to March 31, with the French group reporting double-digit growth across all activities and all geographic regions, excluding Japan. In organic terms, revenues were up 28.6 percent.

Kering achieved a record performance in the first three months of the year, posting a sharp acceleration in sales growth,” said François-Henri Pinault, chairman and chief executive officer of Kering.

“In a climate of persistent geopolitical and macroeconomic uncertainties, our first quarter puts us in a particularly good position for the balance of the year,” he added.

The figures come on the heels of a 15 percent rise in revenues at LVMH Moët Hennessy Louis Vuitton in the first quarter. Burberry, meanwhile, reported total revenue rose 14 percent in the six months ended March 31.

Organic sales at Gucci, which accounts for more than a third of Kering’s revenues, rose 48.3 percent in the first quarter, their strongest increase in two decades, to 1.35 billion euros, or $1.44 billion. All dollar rates are calculated at average exchange rates for the period in question.

The brand benefited from its reinvention under creative director Alessandro Micheleand ceo Marco Bizzarri, registering double-digit growth for all product categories. Sales in directly operates stores were up 51.4 percent on a comparable basis, with Western Europe posting a 66.4 percent increase, and the Asia-Pacific region registering a 63.1 percent uptick.

The luxury division as a whole — which includes brands such as Yves Saint Laurent, Bottega Veneta, Stella McCartney, Boucheron and Brioni — saw revenues increase 31.6 percent in organic terms. The sports and lifestyle division, which revolves around Puma, posted a 14 percent rise.

Saint Laurent delivered another strong quarter, with sales up 33.4 percent on a comparable basis. The first collection designed by Anthony Vaccarello hit stores in January and has been “extremely well received,” the group said, reporting that some women’s ready-to-wear and shoe designs achieved bestseller status.

Bottega Veneta posted a 2.3 percent rise in organic sales, after a drop of 9.4 percent in the fourth quarter of 2016, helped by the general improvement in the luxury environment. Sales in directly operated stores rose 3.6 percent on a comparable basis, with women’s shoes, in particular, driving demand.

Revenues from the group’s other luxury brands rose 11.1 percent. Couture and leather goods houses posted an aggregate revenue rise of 11.1 percent, fueled by the “excellent” performance of Balenciaga’s directly operated stores, reflecting strong demand for Demna Gvasalia’s collections. Stella McCartney and Alexander McQueen achieved growth, while Brioni’s sales in directly operated stores improved.

Solid performances from Boucheron and Pomellato helped drive a 13.1 percent rise in revenue from watches and jewelry houses.

Kering Eyewear, whose revenues were consolidated for the first time, registered sales of 112.9 million euros, or $120.3 million, before elimination of intra-group sales and royalties received by brands. Net revenue for the period totaled 85.5 million, or $91.1 million.

As reported, organic sales at Puma rose 15.3 percent in the first quarter, with quarterly sales surpassing one billion euros, or $1.1 billion, for the first time in the company’s history.

Puma ceo Bjørn Gulden cited the Fierce, Basket Heart and Limitless lines — backed respectively by campaigns starring Kylie Jenner, Cara Delevingne and The Weeknd — among top sells in the first quarter.

“It’s the strongest quarter in retail that we’ve had since I started. The sell-through of new [styles] has been so strong that we have been out of stock on certain units,” he told analysts and reporters on a conference call.

In order to keep up with demand, the firm has had to pull forward some of its deliveries meant for the second quarter. “The retailers ordered more because they needed more, which has probably not been the case for Puma for a long time,” Gulden said.

The executive declined to comment on speculation that Kering is looking to offload Puma, a rumor that fizzed earlier this month following the announcement that Pinault was stepping down from Puma’s board of directors.

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