Kering : China weighs on Gucci’s second quarter sales growth
PARIS, July 27 (Reuters) – Sales at French luxury group Kering’s top brand Gucci rose by just 4% in the second quarter, the group said on Wednesday, as a new round of lockdowns weighed on revenues in the key Chinese market.
Overall sales for Kering, which is also home to fast-growing labels Saint Laurent and Bottega Veneta, came in at 4.97 billion euros ($5.03 billion), up 12% on a comparable basis.
The figure was above market expectations for revenues of 4.44 billion euros according to a Visible Alpha consensus cited by UBS.
Gucci’s 4% growth in the three months to June compared with a 19% rise over the same period for sales at LVMH’s fashion and leather goods division, led by the Louis Vuitton and Dior brands.
It also marked a slowdown from 13% growth for Gucci sales in the first quarter of the year.
Luxury groups have tapped strong post-pandemic demand for designer labels as socialising resumes and shoppers spend savings accumulated during the pandemic, brushing off concerns about volatile stock markets and rising prices.
After years of stellar growth Gucci, which accounts for more than half Kering’s revenue and the bulk of its profit, has suffered more than some rivals in recent quarters as it is more exposed to the Chinese market and to international tourist flows, which have not returned to normal.
The group’s finance chief, Jean-Marc Duplaix, told reporters it had seen an improvement in China in June as movement restrictions were gradually lifted, and pointed to new collections and price increases helping Gucci’s sales, particularly in Europe and the United States.
“The Chinese market was impacted by measures to fight COVID, of course, even if June began to show some improvement as these measures eased up,” Duplaix said, adding that as much as 35% of Gucci’s stores in the country were closed in April and May.
The group is working to reinforce its Gucci management teams in China and is maintaining investments like store openings in the country, he said.
Kering continues to consider the Chinese market “absolutely key” with growth potential that remains “intact in the long run,” he added.
Higher marketing expenses to support the label meant its operating margin declined to 36.5% in the quarter, compared with more than 41% for LVMH’s fashion brands.
($1 = 0.9876 euros)
Reporting by Mimosa Spencer, editing by Silvia Aloisi and David evans
Read also > LVMH improves its operating profitability in the first half
Featured photo : © Kering
What's Your Reaction?
[EN] CLAIRE DOMERGUE, A SPECIALIST IN COMMUNICATION IN THE LUXURY SECTOR, HAS SURROUNDED HERSELF WITH EXPERTS TO CREATE THE FIRST MEDIA DEDICATED TO THE ECONOMIC NEWS OF LUXURY AND FASHION. THE LATTER DRAWS THE ATTENTION OF ITS READERS TO ALL THE MAJOR PLAYERS IN THESE SECTORS WHO SHARE THEIR EXPERIENCES, VISIONS AND KNOW-HOW. MORE THAN A SPECIALIZED WEBZINE, LUXUS PLUS IS A MULTI-SECTOR INFORMATION SYSTEM, WHICH HAS BECOME THE REFERENCE MONITORING TOOL FOR LUXURY AND FASHION PROFESSIONALS. OUR NEWSLETTERS CONTRIBUTE TO MAKE OUR READERS AWARE OF THE CHANGES AFFECTING THE LUXURY INDUSTRIES. THANKS TO AN INCREASED WATCH AND AN EXCELLENT KNOWLEDGE OF THE SECTOR, WE ARE INTERESTED IN THE MAIN ECONOMIC AND TECHNOLOGICAL STAKES OF FASHION, FINE WATCHMAKING, JEWELRY, GASTRONOMY, COSMETICS, PERFUMES, HOTELS, PRESTIGIOUS REAL ESTATE...********[FR] Claire Domergue, spécialiste de la communication dans le secteur du luxe, s’est entourée d’experts pour créer le premier média consacré à l’actualité économique du Luxe et de la mode. Ce dernier attire tout particulièrement l’attention de ses lecteurs sur l’ensemble des acteurs majeurs de ces secteurs qui y partagent leurs expériences, visions et savoir-faire. Plus qu’un webzine spécialisé, Luxus Plus est un système d’information multi-sectoriel, devenu l’outil de veille de référence pour les professionnels du luxe et de la mode. Nos newsletters de veille contribuent en effet à sensibiliser nos lecteurs aux mutations qui touchent les industries du luxe. Grâce à une veille accrue et à une excellente connaissance du secteur, nous nous intéressons aux principaux enjeux économiques et technologiques de la mode, la haute horlogerie, la joaillerie, la gastronomie, des cosmétiques, parfums, de l’hôtellerie, l’immobilier de prestige…