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Gucci Helps Kering Report Fastest Growth Since 2012

Kering follows peers LVMH, Burberry and Hermes as the latest luxury-goods company to report improvements in Asia and Europe.
Gucci Spring/Summer 2017 | Source: InDigital.tv
By
  • Bloomberg

PARIS, France — French luxury-goods maker Kering's fourth-quarter sales rose at the fastest pace since 2012, beating expectations as the recent rebound in luxury demand boosted revenue at Gucci, its biggest brand.

Sales climbed 10.4 percent on a comparable basis, Paris-based Kering said in a statement Friday. Analysts predicted growth of 7 percent, according to the median of 19 estimates. Gucci revenue advanced 21 percent, almost twice as fast as analysts expected, benefiting from chief executive officer Marco Bizzarri and creative director Alessandro Michele's efforts to turn around the Italian luxury house. The shares climbed the most in more than three months in Paris trading.

Kering follows peers LVMH, Burberry and Hermes as the latest luxury-goods company to report improvements in Asia and Europe. The BI Europe Luxury Goods Top Peers index has jumped 8.1 percent this year, amid signs that appetite for expensive handbags, silk scarves and timepieces is rebounding. The industry had grappled with ebbing demand in China and a slowdown in tourism in Europe after terrorist attacks.

Chief executive officer Francois-Henri Pinault said Kering aims to “intensify our current momentum” in 2017 despite an “uncertain macroeconomic and geopolitical environment.”

All the main categories like handbags and fashion contributed to Gucci's faster growth, even as the brand decided to end markdowns in stores. Yves Saint Laurent's sales rose more than 20 percent for a sixth year.

Sales at Bottega Veneta dropped 9.4 percent in 2016. Kering said the decline began to ease in the fourth quarter. Directly operated stores, especially in western Europe, saw a less marked decline in sales as tourist numbers started to pick up towards the end of the year.

“Gucci’s sales momentum was clearly affirmed during the fourth quarter,” said John Guy, an analyst at MainFirst Bank AG. “Bottega Veneta is in a period of repositioning its store and demographic base, which is more than 80 percent skewed to the Asian buyer.”

Sales for Kering in 2016 rose 8.1 percent on a comparable basis to €12.4 billion, compared with the €12.3 billion analyst estimate. Recurring operating income was €1.89 billion.

Kering climbed 3 percent to €231.15 at 9:10 a.m. in Paris after gaining as much as 4.7 percent, the biggest intraday advance since Oct. 26.

By Corinne Gretler; editors: Matthew Boyle, Thomas Mulier and Phil Serafino.

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