Luxury group Kering has released its financial results for the third quarter of 2020, showcasing a 1.2% decline in comparable sales. However, this decrease is a significant improvement from the 43.7% drop experienced in the second quarter. The company reported a revenue of €3.717 billion ($4.36 billion) for Q3 2020, which is relatively close to last year’s figures.
The decline in wholesale sales by 5.2% can be attributed to the reduction in international tourist flows during the Covid-19 crisis, affecting travel retail. Kering has taken steps to counter this by implementing a global rationalization strategy that emphasizes a more exclusive distribution model. Despite this, e-commerce sales have skyrocketed by 101.9%. The launch of the Saint Laurent e-shop in China in June and the overall acceleration of online retail have contributed to online sales representing 12.5% of the company’s global sales in the first nine months of the year.
François-Henri Pinault, Chairman and CEO of Kering, praised the significant recovery in sales during a challenging environment. He credited the creativity of their brands and the organization’s agility for supporting the rebound, bringing the company back to a level close to that of Q3 2019. Pinault also highlighted the successful execution of strategic initiatives such as internalizing e-commerce activities and strengthening growth platforms. He expressed confidence in the company’s long-term performance, despite uncertainties and limited visibility.
In terms of individual brand performance, Saint Laurent saw a 3.9% growth in comparable sales, while Bottega Veneta experienced a remarkable 20.7% increase in revenue. The creative direction of Daniel Lee has resonated with customers, contributing to the success of the Italian fashion house. Other brands within the Kering group, including Balenciaga and Alexander McQueen, also reported positive growth with a collective increase of 11.7%.
However, Kering’s flagship brand, Gucci, which accounts for almost 80% of the company’s overall results, faced disappointing sales declines of 8.9% this quarter, amounting to approximately €2.09 billion ($2.45 billion). Gucci has been significantly impacted by the decrease in tourist flows and the reduction of its retail network. In response, the brand is tapping into the burgeoning second-hand market to adapt to evolving consumer trends.
Despite the challenges faced by the luxury industry, Kering remains optimistic about its future performance. With a strong financial position, continued investments in brand exclusivity, and a focus on strategic growth platforms, the company is well-positioned to navigate the uncertain landscape.
Useful links:
1. Kering official website
2. Gucci official website
