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Gucci Powers Kering’s Q3 Revenue Rebound

Luxury goods maven Kering Group reported strong sequential improvement in third-quarter comparable revenue on Thursday, nearly unchanged from the third quarter of 2019 despite the Covid-19 crisis.

Consolidated revenue in the third quarter ended Sept. 30 dipped 4.3 percent to 3.72 billion euros ($4.4 billion), down 1.2 percent on a comparable basis. Kering said this performance represents a sharp rebound compared with the year-on-year contraction of 43.5 percent in the second quarter.

“In a tough environment, Kering achieved substantial revenue recovery in the third quarter,” François-Henri Pinault, chairman and CEO of Kering, said. “The creativity of each of our houses and the agility of our organization led to a sharp rebound in sales, nearly matching the level of the 2019 third quarter. We are pursuing with determination the implementation of our strategic initiatives–the internalization of our e-commerce activities reached other key milestones and we continue bolstering our growth platforms.”

With a solid financial situation, Kering continues investing in its brands houses to enhance their exclusivity and strength their positions, Pinault said.

“Against a backdrop that remains uncertain, and despite limited visibility, we are well prepared and confident in our ability to deliver good performances over time,” he added.

Kering said it reaped the benefits of sharp growth in certain regions, notably North America, up 44.1 percent, driven by a rebound in local demand, and Asia-Pacific, ahead 18.5 percent, fueled by strong momentum in China. Sales performance in Western Europe was down 41 percent and Japan fell 22.8 percent, both hampered by a halt in tourism.

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Online sales continued an “outstanding growth trajectory,” Kering said, up 101.9 percent in the third quarter, led by North America and Asia-Pacific. In the first nine months of the year, e-commerce accounted for 12.5 percent of company retail sales.

Wholesale revenue declined 5.2 percent on a comparable basis, reflecting both the sharp slowdown in travel retail and the group’s strategy toward increasingly exclusive distribution.

Gucci’s revenue picked up sharply in the third quarter from the prior quarter. At 2.09 billion euros ($2.47 billion), revenue was down 12.1 percent on a reported basis and 8.9 percent on a comparable basis.

Gucci’s retail sales were down 4 percent on a comparable basis. A gain of 43.7 percent in North America and 10.6 percent in Asia-Pacific was outweighed by a 47.3 percent decline in Western Europe–though tighter relationships with local customers in Europe are paying off, Kering said–and a drop of 25.9 percent in Japan, with a lack of tourists hurting sales during the period. Online sales grew sharply worldwide, accounting for 12.6 percent of total retail sales.

Wholesale revenue contracted 31.6 percent, in line with the brand’s ongoing strategy of enhancing the exclusivity of its distribution by reducing the number of third-party retailers.

Yves Saint Laurent returned to growth in the third quarter in its directly operated stores and its wholesale channel. Total revenue of 510.7 million ($604.82 million) was up 0.8 percent year on year as reported and 3.9 percent on a comparable basis.

Retail sales rose 5.8 percent on a comparable basis. In addition to its strong appeal among local customers in Europe and North America, Yves Saint Laurent’s market penetration is increasing in the Asia-Pacific region, where awareness of the brand is rising together with the expansion of its store network, Kering said.

Online sales more than doubled year on year, notably reflecting the successful launch of the house’s China e-commerce site in June. Buoyed by the success of the fall collection, wholesale revenue also rose, up 3.4 percent.

Bottega Veneta’s third-quarter performance confirmed the success of its collections with longstanding clientele and new customers. Revenue totaled 332.5 million euros ($393.13 million), up 17 percent as reported and 20.7 percent on a comparable basis. Sales generated in directly operated stores rose 12.1 percent, spurred by a strong performance in Asia-Pacific and solid growth in North America.

Online sales achieved triple-digit growth. Revenue from wholesale jumped 63.4 percent, reflecting significant market share gains.

The company’s ‘other houses’ unit returned to growth in the third quarter, with revenue of 669.1 million euros ($791.11 million), up 9.3 percent as reported and 11.7 percent on a comparable basis. Retail sales rose 10 percent and wholesale revenue was up 16.7 percent.

Alexander McQueen and Balenciaga delivered double-digit growth in retail and wholesale channels. Kering said both brands were benefiting from the expansion of their directly operated store networks in high-growth markets, especially Asia-Pacific and North America, and progress in their online sales was also accelerating.