In a Nutshell: Kering again reported a sharp rise in income for the first quarter of the fiscal year. Even after a strong start in FY18 set comparable goals rather high, both Gucci and Yves Saint Laurent posted double-digit revenue growth. Comparable sales for Gucci rose 20 percent in the first quarter, just ahead of Yves Saint Laurent at 17.5 percent.
Overall, Kering’s other houses performed well, too. In total, Kering’s houses posted a 17.4 percent growth in comparable sales during the quarter with 18.6 percent of that coming from its directly-operated store network. Only Bottega Veneta registered a revenue loss, with sales down 8.9 percent on a comparable basis as Kering continues to reposition the brand.
Much of the group’s revenue growth came from the Asia-Pacific region, growing by 29.6 percent on a comparable basis. Gucci, in particular, did well there—posting 35.3 percent sales growth in the region compared to 15.8 percent growth in Japan and 11.9 percent growth in Western Europe.
Sales: Kering’s continuing operations earned 3.78 billion euros ($4.27 billion) in Q1, an increase of 17.5 percent, year-over-year. Gucci, by far Kering’s largest brand, earned 2.32 billion euros ($2.62 billion) of that, an increase of 20 percent over this time last year. This was even more impressive than it looks for Gucci, as the brand’s base of comparison from FY18, 1.87 billion euros in revenue ($2.11 billion) at 37.9 percent revenue growth, was especially high.
Yves Saint Laurent’s 17.5 percent revenue growth, resulting in total revenue of 497.5 million euros ($561.98 million), was also an improvement on a relatively high base of comparison. In the first quarter of last year, the brand notched a revenue growth rate of 19.6 percent on total sales of 408.2 million euros ($496.8 million).
Outside of its top two brands, which made up about 75 percent of its total revenue, Kering showed that its other houses—especially Balenciaga and Alexander McQueen—also did well. Outside of Gucci and Yves Saint Laurent, Kering’s houses reported comparable revenue of 576.9 million euros ($651.82 million), up 21.7 percent over last year.
Bottega Veneta, a house in transition, recorded only 248.1 million euros ($280.32 million) in revenue, down 8.9 percent in comparable sales. Kering expects the brand to gain momentum as collections from the house’s new designer, Daniel Lee, begin to penetrate the market.
CEO’s Take: François-Henri Pinault, the chairman and chief executive officer for Kering, chimed in on his group’s healthy performance:
“Delivering a solid start to 2019, Kering continued to outperform. On top of very strong increases in the first quarter of last year, Gucci, Saint Laurent and our Other Houses all posted excellent revenue growth, fueled by the creativity of their offers and the innovativeness of their execution,” Pinault said. “As Bottega Veneta implements a fundamental reset, early indicators are highly encouraging. The agility we have put at the heart of our organization positions us well to continue achieving steady, sustainable and profitable growth.”
Pinault and his rivals at LVMH recently made headlines for offering up hundreds of millions in euros to help rebuild the Notre-Dame cathedral in Paris.