Skip to main content

Kering CEO Says China ‘Overshadowed’ Gucci’s Strong Q1

China lockdowns affected sales toward the end of Kering’s first quarter.

In a Nutshell: “We opened 2022 on a very solid first quarter in a more uncertain environment, notably impacted by tightening Covid restrictions in China since March,” Francois-Henri Pinault, chairman & CEO, said. “All our Houses posted double-digit revenue growth in the quarter, with spectacular performances at Saint Laurent, our Other Houses, particularly Balenciaga, and Kering Eyewear. Bottega Veneta also delivered sharp higher sales on a more demanding base. Gucci’s strong showing in North America and Europe was overshadowed by its exposure to China, where we are boosting its organization to fully capture the vitality of the market.”

The company said Gucci sales grew 15 percent at directly-operated stores though Covid-19 restrictions affected sales at the end of the quarter. Comparable wholesale revenue declined 2 percent. Kering said it completed the “rationalization of this sales channel.”

Yves Saint Laurent’s directly operated store sales rose 49 percent on a comparable basis, with double-digit growth in all product categories. “This excellent momentum was driven by spectacular performances in Western Europe and North America,” the company said. “Revenue from wholesale, which is being streamlined, rose 10 percent on a comparable basis.” Kering previously said one its’s working toward “more exclusive, tighter controlled distribution.”

The company in January it agreed to sell its 100 percent stake in Sowind Group SA, which owns the Swiss watch manufacturers Girard-Perregaux and Ulysse Nardin, to its current management. One month later, the Kering Eyewear division signed an agreement to acquire Maui Jim, Inc., the world’s largest independent sunglasses brand in a deal expected to close in the second half of 2022. And in March, the company said Gianfilippo Testa will become CEO of Alexander McQueen on May 1, succeeding Emmanuel Gintzburger, who will become CEO of Versace on Sept. 12.

More than 93 percent of the luxury conglomerate‘s supply chain structure is in Europe, mostly in Italy. It works with 3,912 suppliers.

Related Stories

Net Sales: Revenue for the first quarter ended March 31 rose 27.4 percent to 4.96 billion euros ($5.37 billion) from 3.89 billion euros ($4.21 billion).

By fashion house, Gucci revenue rose 19.5 percent to 2.59 billion euros ($2.81 billion), while Yves Saint Laurent sales jumped 43.0 percent to 739 million euros ($800.7 million). Bottega Veneta saw sales increase 20.8 percent to 396.4 million euros ($429.4 million), while its Other Houses—Balenciaga, Alexander McQueen, Brioni and jewelry houses—saw a revenue spike of 25.5 percent to 973.4 million euros ($1.05 billion). The company’s Kering Eyewear and Corporate division rose 60.5 percent to 308.1 million euros ($333.8 million).

CEO’s Take: “While we remain attentive to economic and geopolitical conditions, we invest in all our brands, whose attractivity will continue to fuel our growth and profitability. Finally, I want to express my heartfelt sympathy, on behalf of all of us at Kering, to the people whose lives are affected by the war in Ukraine,” Pinault said.