‘The Gucci party is postponed’: For Kering, luxury sales shows pandemic isn’t over yet

October 20, 2021, 9:12 AM UTC

Kering SA shares tumbled after slowing growth at Gucci, its biggest brand, put more pressure on the label’s new collection to deliver a strong holiday season.

Comparable sales at the Italian brand rose 3.8% in the third quarter from a year earlier, Kering said in a statement Tuesday. Analysts had forecast a 9.3% increase.

The performance suffered from virus restrictions, which hindered demand in China, New Zealand, Australia and elsewhere, Jean-Marc Duplaix, Kering’s chief financial officer, said on a call with reporters. The stock fell as much as 5.8% in early Paris trading.

Gucci, which generates more than half of Kering’s revenue, released its Aria collection near the end of last month. The line, which celebrates the brand’s centennial, features suede jackets and flowery patterns reminiscent of the 70s. Gucci is particularly reliant on new products driving demand, so shoppers’ reactions are being closely watched.

In a call with analysts, Duplaix said he expects Gucci sales will get a boost from Aria, adding the group is pleased with its pricing strategy and recent sales trends. The line’s product mix is also broader, widening its appeal, Duplaix said.

Party Postponed

“The Gucci party is postponed,” Bernstein analyst Luca Solca wrote in a note after the results. Gucci continues to perform behind other “mega brands” such as a LVMH’s Louis Vuitton, he added.

Kering’s sales for the first nine months of 2021 totaled 12.2 billion euros ($14.2 billion), surpassing 2019 levels. Saint Laurent posted the best performance during the third quarter, with sales at the Parisian brand surging 28%.

LVMH, the owner of brands including Louis Vuitton and Dior, last week said it’s on track to top 2019 revenue levels, showing how rapidly some luxury giants have bounced back. Hermes International will report sales on Thursday.

The movie House of Gucci, which recounts the 1995 murder of family heir Maurizio Gucci, is set for release next month. The film, starring Lady Gaga and Adam Driver, should bring fresh attention to the brand during the holiday shopping season, Claire Roblet, head of investor relations at Kering, said during the call.

Another event that will be closely watched is the release of the Gucci and Balenciaga “hacking” collaboration which is due to release next month as well, Roblet added. The project, which was unveiled in April, features jackets and white suits with both brands’ names and logos on them.

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