Gucci powers forecast-beating revenue growth at Kering

Revenue at the French luxury goods group rose 32 % to €5.41 bn in fourth quarter

Kering on Thursday reported fourth-quarter revenue jumped nearly a third, beating expectations over the holiday period as marketing investments and 100th anniversary promotion events helped boost the popularity of its top brand Gucci.

Overall revenue at the French luxury goods group rose 32 per cent on a comparable basis to €5.41 billion in the last three months of the year, powered by a surge of the same magnitude at Gucci that was almost double a 17 per cent consensus forecast by analysts.

The strong comeback by Gucci after a disappointing third quarter will come as a relief for Kering - the label accounts for 60 per cent of its revenues and around 70 per cent of its profits.

"This is an encouraging performance," said analysts at Exane BNP Paribas, noting the bar had been set higher as most luxury players significantly accelerated sales growth over the fourth quarter. Larger rival LVMH, earlier this month reported a 28 per cent rise in its fashion and leather goods division, lifted by the performance of its blockbuster labels Louis Vuitton and Christian Dior.

After cutting advertising and other expenses as the pandemic struck in 2020, Kering increased marketing spending to boost its star label in 2021 and this paid off particularly in the final part of the year, with the arrival of the new Aria collection in stores.

The release in November of Ridley Scott’s film “House of Gucci”, although not directly linked to the brand, also helped increase the visibility of its designs.

Kering's other brands also did well. Yves Saint Laurent, its second-largest label, saw fourth quarter revenue rocket 47 per cent, lifted by a rebound in ready-to-wear fashion and shoes.

Kering’s finance chief Jean-Marc Duplaix told reporters the brand - which increased prices twice in 2020 and again in 2021 - would raise prices in a “targeted manner” this year. Louis Vuitton hiked prices this week to offset rising costs and protect margins.

Mr Duplaix said that despite an inflationary environment with higher raw material and transportation costs, the group was confident it could keep improving its profitability.

Mr Duplaix said that the group would continue to pursue organic growth and develop its labels, but was well-placed to pursue acquisitions, adding it had a very healthy balance sheet and practically zero debt.

Fuelled by its reliance on Gucci, speculation has swirled that Kering might contemplate major acquisitions to boost its portfolio - especially as larger rival LVMH last year expanded with its $15.8 billion purchase of jeweller Tiffany.

- Reuters

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