Despite Flattening Sales at Gucci, Kering Still Exceeds Expectations

Kering’s revenues grew 21.9 percent in the first quarter, despite a marked flattening in the growth rate at its star brand, Gucci, after several years of stratospheric increases.

Organic sales at Gucci were up 20 percent in the first quarter — down from the 28.1 percent jump posted in the previous quarter. This was in line with the consensus forecast of analysts, who expect a soft landing for the brand despite the planned introduction of new categories like makeup and high jewelry.

Kering, the owner of brands including Saint Laurent, Balenciaga and Alexander McQueen, said group sales totaled 3.78 billion euros in the three months to March 31, slightly above expectations. Stripping out the effect of currency fluctuations, revenues were up 17.5 percent during the period.

François-Henri Pinault, chairman and chief executive officer of Kering, said the group continued to outperform sector peers.

“On top of very strong increases in the first quarter of last year, Gucci, Saint Laurent and our other houses all posted excellent revenue growth, fueled by the creativity of their offers and the innovativeness of their execution. As Bottega Veneta implements a fundamental reset, early indicators are highly encouraging,” he said.

“The agility we have put at the heart of our organization positions us well to continue achieving steady, sustainable and profitable growth,” Pinault added.

In the first quarter, Saint Laurent posted a 17.5 percent rise in organic sales, while Bottega Veneta saw a 8.9 percent decline as it prepares for the first designs by new creative director Daniel Lee to hit stores from mid-year. Other houses, a division that includes Balenciaga and McQueen, saw sales rise 21.7 percent in the quarter.

Kering this month formally completed its transformation into a pure luxury player with the sale of action sports brand Volcom, and Pinault signaled earlier this year that the group is on the hunt for acquisitions.

Kering’s results come after LVMH Moët Hennessy Louis Vuitton, the world’s largest luxury group, reported last week that overall revenues were up 16 percent in the first quarter to 12.54 billion euros, helped by a stronger-than-expected performance in its key fashion and leather goods division.

This story was reported by WWD and originally appeared on WWD.com.

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