Kering Beats Expectations With 4.3% Q3 Sales Decline

PARIS — Kering said sales trends improved sharply in the third quarter, driven by a strong recovery in North America and Asia-Pacific, and a triple-digit increase in online revenues.

Group revenues in the three months to Sept. 30 fell 4.3 percent to 3.72 billion euros, representing a decline of 1.2 percent in comparable terms, with the company noting “excellent momentum” in Mainland China.

This came on the heels of a 43.5 percent drop in the second quarter as the coronavirus pandemic forced the French luxury group to close stores and factories worldwide, and brought tourism to a halt. The figures beat a consensus of analysts’ estimates, which had called for an 11 percent fall in reported sales to 3.35 billion euros.

By comparison, sector leader LVMH Moët Hennessy Louis Vuitton last week reported a 10 percent drop in third-quarter sales, while Hermès International posted 4.2 percent revenue growth during the period. 

Organic sales at Kering’s cash-cow brand Gucci fell 8.9 percent in the third quarter, compared with a 44.7 percent drop in the prior three months, but Saint Laurent and Bottega Veneta returned to positive territory, as did the “other brands” division, which houses Balenciaga and Alexander McQueen.

Comparable revenues at Saint Laurent were up 3.9 percent, while Bottega Veneta registered a 20.7 percent jump, confirming the “resounding success” of its collections, Kering reported. Other houses were up 11.7 percent as Alexander McQueen and Balenciaga delivered double-digit growth in both retail and wholesale channels. 

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“In a tough environment, Kering achieved substantial revenue recovery in the third quarter. 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,” said François-Henri Pinault, chairman and chief executive officer of Kering.

“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 in a statement.

Kering said revenues in North America were up 44.1 percent in the third quarter, driven by a rebound in local demand, while Asia-Pacific was up 18.5 percent. Sales in Western Europe fell 41 percent and Japan was down 22.8 percent, both sharply hit by the halt in tourism.

Online sales shot up 101.9 percent in the third quarter, led by North America and Asia-Pacific, as Kering continued the process of bringing its e-commerce activities back in-house. Online sales accounted for 12.5 percent of the group’s retail revenues in the first nine months of the year. 

Saint Laurent reported a strong start for its Chinese e-commerce site, launched in June, with online sales in Asia-Pacific in the third quarter more than doubling year-over-year. 

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