Gucci Powers Forecast-Beating Sales Growth at Kering

The logos of French luxury group Kering and fashion house Balenciaga are pictured on Kering headquarters in Paris, France, April 20, 2020. REUTERS/Charles Platiau
The logos of French luxury group Kering and fashion house Balenciaga are pictured on Kering headquarters in Paris, France, April 20, 2020. REUTERS/Charles Platiau
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Gucci Powers Forecast-Beating Sales Growth at Kering

The logos of French luxury group Kering and fashion house Balenciaga are pictured on Kering headquarters in Paris, France, April 20, 2020. REUTERS/Charles Platiau
The logos of French luxury group Kering and fashion house Balenciaga are pictured on Kering headquarters in Paris, France, April 20, 2020. REUTERS/Charles Platiau

Kering (PRTP.PA) reported sharp growth in fourth-quarter sales on Thursday, beating expectations over the holiday period as marketing investments and 100th anniversary events helped boost the popularity of its top Gucci brand.

Overall sales at the French luxury goods group rose 31.9% on a comparable basis to 5.41 billion euros ($6.14 billion) in the last three months of the year, powered by a 31.6% surge at Gucci that was almost double a 17% consensus forecast by analysts.

The strong comeback by Gucci after a disappointing third quarter will come as a relief for Kering, as the label accounts for 60% of its revenues and around 70% of its profits, Reuters reported.

After cutting advertising and other expenses as the pandemic struck in 2020, Kering increased marketing spending to boost its star label in 2021 and this paid off particularly in the final part of the year, with the arrival of the new Aria collection in stores.

The release in November of Ridley Scott's film "House of Gucci", although not directly linked to the brand, also helped increase the visibility of its designs.

Kering's finance chief Jean-Marc Duplaix told reporters the brand - which increased prices twice in 2020 and again in 2021 - would raise prices in a "targeted manner" this year. Rival Louis Vuitton, owned by LVMH (LVMH.PA), hiked prices this week to offset rising costs and protect margins.

Duplaix said that despite an inflationary environment with rising raw material and transportation costs, the group was confident it could keep improving its profitability.



Hermes Sales Jump 9% in Q2, with US Prices Rising More Than Elsewhere 

A logo of fashion house Hermes is seen outside a shop in Paris, France, April 15, 2024. (Reuters) 
A logo of fashion house Hermes is seen outside a shop in Paris, France, April 15, 2024. (Reuters) 
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Hermes Sales Jump 9% in Q2, with US Prices Rising More Than Elsewhere 

A logo of fashion house Hermes is seen outside a shop in Paris, France, April 15, 2024. (Reuters) 
A logo of fashion house Hermes is seen outside a shop in Paris, France, April 15, 2024. (Reuters) 

Hermes on Wednesday reported a 9% rise in quarterly sales due to the continued appetite from rich shoppers for its coveted, $10,000 handbags, helping the French house defy the global luxury downturn.

Executive Chairman Axel Dumas said so far no further price hikes were planned this year after a general 7% rise globally and an additional 5% in the US, where the company flagged it would fully pass on the effects of tariffs to its clients.

Speaking to journalists on a call, Dumas said these price rises would probably suffice to offset the 15% tariff rate agreed between the Trump administration and the EU.

Sales for the second quarter to the end of June reached 3.9 billion euros ($4.50 billion), up 9% at constant currency rates, Hermes said, broadly in line with analysts' expectations for a 10% rise.

The appeal of the brand's famous Birkin, Constance and Kelly bags so far has shielded the group from headwinds in the luxury sector, while growth at Hermes's smaller fashion and silk divisions slowed and perfume and beauty sales contracted.

"This is a sign the market is staying difficult", Bernstein analyst Luca Solca said.

Hermes shares fell 2.5% in early Paris trade.

Hermes, which this year overtook LVMH as France's most valuable listed company by market capitalization, maintains tight control over production, raising it at a steady pace of around 6% to 7% per year, frustrating some shoppers who have to wait months for a handbag.

That strategy has helped the company buck an industry slowdown as big fashion labels like Chanel, Kering's Gucci and LVMH-owned Louis Vuitton and Dior grapple with declining sales.

A prolonged slump in China has pushed the focus of European luxury labels to the United States this year, although demand there has been rocky due to a volatile stock market and fragile consumer confidence.

"I don't see any fundamental changes in the sales climate in China at the moment," Dumas said, adding that he still saw China's long-term potential as intact with no structural changes in consumer sentiment.

Consultancy Bain forecasts worldwide luxury goods sales will fall by between 2% and 5% in 2025 after a 1% decline last year.

Shares in Hermes have risen 2% since the start of the year, outpacing the sector along with Cartier-owner Richemont, which has benefited from a surge in sales of high-end jewelry but is trading flat.