Gucci Once Again Proves Why It’s Kering’s Cash Cow

Kering continued to deliver above-average growth in the first quarter, with sales rising 27.1 percent, driven by another quarter of “spectacular” growth at cash-cow brand Gucci, the French luxury group said Tuesday.

Revenues in the three months ended March 31 totaled 3.11 billion euros, representing a rise of 36.5 percent on a comparable basis. The group posted double-digit growth in all geographic regions, with North America and Asia-Pacific leading the way, while online sales more than doubled during the quarter.

Despite a strong comparison base, organic sales at Gucci vaulted up 48.7 percent to 1.87 billion euros ($2.29 billion) in the first quarter. Sales at Yves Saint Laurent were up 19.6 percent in comparable terms, while the “other houses” segment jumped 37.9 percent, reflecting the “exceptional momentum” at Balenciaga, the group said.

“Kering maintained its outstanding sales momentum in the first quarter. Under its new luxury pure-player profile, the group clearly outperformed a market that remains well-oriented,” François-Henri Pinault, chairman and CEO, said in a statement.

“In the balance of the year, we face a high base of comparison and a tough currency environment, but we are confident in the ability of our houses to continue doing better than their peers, leveraging their innovativeness and creative audacity,” the executive added.

Kering has restated its revenues to reflect the impending spinoff of most of its stake in Puma as well as Stella McCartney’s decision to buy back the French giant’s 50 percent share of her brand, a transaction it expects to be completed in the first quarter of 2019.

Both companies are now classified as noncurrent assets held for sale and discontinued operations, alongside action sports brand Volcom, which Kering has decided to sell to focus fully on luxury activities.

The figures come on the heels of a 10 percent rise in revenues at LVMH Moët Hennessy Louis Vuitton in the first quarter. Hermès is scheduled to publish first-quarter results on May 3, while Compagnie Financière Richemont will report its annual results on May 18.

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