Shares in Kering dropped 8 percent Wednesday morning after the French luxury group reported quarterly sales that fell more than analysts predicted for Gucci, its biggest and most profitable brand.
Kering’s smaller brands grew, but more slowly than they had the previous quarter. Yves Saint Laurent’s sales rose a modest 0.5 percent, while Bottega Veneta grew 16 percent. The “Other Brands” division including Balenciaga and Alexander McQueen slowed to 2 percent growth compared with a 12 percent jump over the summer.
Booming sales at Gucci since 2016 under designer Alessandro Michele and chief executive Marco Bizzarri more than tripled profit and powered an explosion of activity for its network of Italian suppliers.
Now, Gucci’s continued decline since the coronavirus crisis has investors wondering just how far the label’s sales will fall, and how long it will take for them to turn around. By contrast, LVMH’s biggest Louis Vuitton and Dior brands powered an 18 percent increase in fashion and leather goods sales during the quarter, as a rebound started over the summer accelerated.
”We are very well positioned to leverage the rebound,” Kering chairman and chief executive François-Henri Pinault said in a presentation to investors.
Gucci has been reducing its exposure to wholesale and, along with Balenciaga, has been investing in developing teams for 3D and virtual reality marketing. Gucci will scrap its cruise collection this year in favour of other marketing investments, Pinault said.