Gucci growth slows but Kering still posts near 19% sales growth

Gucci Kering
Gucci AW19

Luxury conglomerate Kering achieved an 18.8% growth in sales in the first half, despite a slow-down in growth at its flagship brand Gucci.

The group, also parent to houses such as Saint Laurent and Balenciaga, achieved revenues of €7.64bn with recurring operating income up 25.3% at €2.25bn.

Gucci revenue was up 16.3% to €4.61bn. The Italian house has enjoyed meteoric growth since creative director Alessandro Michele was appointed in 2015 and now accounts for 40% of Kering’s revenue. Kering had been signalling that its growth momentum would level off and settle at a steady level, as opposed to the 30%-plus levels the market had become used to.

The brand, which accounts for 40% of Kering’s revenue, is on course to achieve the group’s goal of achieving €10bn in sales by 2020 as it aims to overtake Chanel and Louis Vuitton as the world’s number one luxury house.

Elsewhere in the group Yves Saint Laurent, under Hedi Slimane, was up 16.6% to €973m and accounts for around quarter of group revenues.

Bottega Veneta, which has just appointed British designer Daniel Lee as creative chief, was down 3.8%, but had “a positive second quarter” as Lee’s new designs began to filter into stores.

“Other houses” which includes Balenciaga, Alexander McQueen and its jewellery houses (such as Boucheron and Pomellato), were up 20.3% to €1.2bn, the vast bulk of which comes from Balenciaga.

“In the first half of the year, we delivered another very strong set of results. Kering’s revenue growth handily topped market trends, and was highly profitable. We created an additional €1.2bn in revenue in the six months, and our operating margin reached a record 29.5%.

“Our strategy is clearly paying off. The success of our brands, built on creativity, innovation, and customer dedication, along with rigorous execution and financial discipline, are delivering a superior combination of organic growth and sustainable profitability,” said Kering chairman and CEO François-Henri Pinault.

Earlier this week rival luxury conglomerate LVMH also posted strong first half results with revenues up 15% at €25.1bn aided by strong performances at its flagship brands Louis Vuitton and Christian Dior.