Kering, the Paris-based luxury group renowned for owning brands like Gucci and Saint Laurent, faced a slight dip in sales growth during the third quarter of 2019. This decline was cushioned by robust spending from consumers in various Asian markets, countering the impact of the ongoing unrest in Hong Kong. Despite the challenging situation, Gucci managed to increase its sales by 10.7% on a comparable basis from July to September. The brand’s success was attributed to drawing in customers from China who shifted their shopping habits back to the mainland, where Gucci boasts an extensive store network. Additionally, strong sales were recorded in destinations like South Korea, highlighting the brand’s global appeal.
In contrast, Saint Laurent, another esteemed label under the Kering umbrella, did not perform as strongly as Gucci amidst the Hong Kong turmoil. This disparity in performance across different brands within the same luxury group underscores the importance of geographical diversity in sales strategies. Brands that rely heavily on specific regions could face challenges in unpredictable circumstances like those experienced in Hong Kong.
Despite these hurdles, Kering reported an overall revenue increase of 14.2% in the third quarter, reaching 3.88 billion euros. On a comparable basis, the growth stood at 11.6%, aligning with industry expectations. Notably, Bottega Veneta, a smaller brand under Kering, saw a notable uptick in sales following the appointment of a new designer.
Gucci remains the star performer for Kering, driving substantial profits even in the face of challenges in markets like the United States. While sales in the US dipped, Gucci’s third-quarter performance provided reassurance with stabilizing trends rather than sharp declines. Having recorded a robust 12.7% revenue growth in the previous quarter, the slight moderation in the third quarter was seen as a positive indicator for investor confidence.
In summary, Kering demonstrated resilience in the third quarter of 2019 despite headwinds in certain regions. Gucci’s ability to pivot during the Hong Kong turmoil and maintain strong sales elsewhere played a pivotal role in mitigating the overall slowdown in sales growth for the luxury conglomerate. Investors will undoubtedly keep a keen eye on Gucci’s performance as it continues to be a key profit generator for Kering.
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