Gucci’s Sales Rebound as Flamboyant Style Makes a Comeback
(Bloomberg) -- Gucci’s sales rebounded in the first quarter, signaling a recovery for the luxury brand after the appeal of its flamboyant fashions waned last year.
Comparable sales, a key measure of retail performance, jumped 25% at the Italian fashion house to 2.17 billion euros ($2.61 billion), owner Kering SA said in a statement Tuesday. Analysts had expected a 19% gain. Gucci represents 56% of total group revenue.
Gucci, which is marking its 100th anniversary this year, suffered more in 2020 than some of its fashion peers. Shoppers judged the luxury brand’s maximalist aesthetic to be out of step with the mood during the pandemic.
Kering also under-invested in marketing and product launches at Gucci last year, Chief Financial Officer Jean-Marc Duplaix acknowledged during a call with analysts. But the company has since changed tack with pop-up events in its stores, he said, and the Italian name will soon release a new handbag with a bamboo handle.
Last quarter, Gucci benefited from “triple-digit” percentage growth rates in China, aided by positive consumer sentiment, he said. More than half of the brand’s revenue came from the Asia-Pacific region.
Sales in the retail network in North America -- its second-biggest market -- grew by 51%. Duplaix pointed to stimulus checks in the U.S. as a factor in the results.
Despite the performance, Gucci’s sales growth was only about half that reported last week at rival LVMH’s fashion and leather-goods unit.
“These results will allay some concerns regarding the slowdown in momentum at Gucci,” said Harry Barnick, an analyst at Third Bridge. He added that the sales recovery at Kering overall is “still lagging behind its biggest competitor.”
Kering’s Bottega Veneta and Yves Saint Laurent brands had comparable-sales growth of 25% and 23%, respectively, in the first quarter, which also exceeded estimates. Bottega Veneta has been relying in part on so-called influencers to promote its products on social media.
Bottega Veneta had its best first quarter ever, Duplaix said. Overall, “we’re very satisfied with the start of this year,” he said.
On average in the first quarter, 17% of Kering’s stores were shut, with around 50% closed in Europe. That proportion increased this month with lockdowns in France and Italy, Duplaix added.
Kering has been reducing Gucci’s reliance on wholesalers and instead favoring distribution via its own stores to better control its image and pricing.
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