Kering delivered another better-than-expected performance in the third quarter as cash cow Gucci brand continued to defy expectations of a slowdown, despite fears that Chinese consumers were tightening their belts as economic growth lost pace.
The parent of brands including Saint Laurent, Balenciaga and Boucheron said Tuesday that sales rose 27.6 percent to 3.4 billion euros ($3.9 billion) in the three months through Sept. 30. This compared with a consensus forecast of 3.27 billion euros, according to analysts polled by FactSet.
Organic sales at Gucci jumped 35.1 percent to 2.1 billion euros in the third quarter, representing the seventh consecutive quarter of growth exceeding 35 percent and sharply exceeding analysts’ forecasts that the growth rate would normalize to a level below 30 percent.
Gucci’s retail sales were up in all regions, led by a 41.9 percent rise in Asia-Pacific and a 40.7 percent increase in North America, the group reported.
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This was offset by a slightly decelerating growth rate at Saint Laurent, the group’s other star brand. It saw revenues rise 16.1 percent in the quarter, compared with a 19.8 percent increase in the second quarter and a rise of 22.2 percent during the same period last year.
Sales at Bottega Veneta, meanwhile, fell 8.4 percent on an organic basis as it prepared to unveil the first designs by new creative director Daniel Lee in Tokyo in early December, ahead of his first full runway presentation in February 2019.
Kering’s “other houses” division posted a 32.2 percent rise in revenues in comparable terms, driven by “exceptional momentum” at Balenciaga and “ongoing sales growth” at Alexander McQueen, Kering said.
The luxury goods sector is on alert for signs of a slowdown in demand from Chinese shoppers, who account for a third of luxury sales worldwide, amid tougher comparatives and ongoing uncertainties about trade tensions with the U.S.
Stripping out the impact of foreign-exchange fluctuations, Kering’s revenues were up 27.5 percent in the third quarter, adding to evidence that the luxury sector is so far immune to the turmoil in Asia.
“We are extraordinarily proud of the remarkable performances Kering delivers quarter after quarter. Our growth, whose pace is unprecedented in the luxury sector, is sound, well-balanced and sustained across all regions and distribution channels,” said François-Henri Pinault, chairman and CEO.
“Beyond short-term developments, we know that the secular growth of the luxury market, but particularly our solid fundamentals and the discipline with which we implement our strategy, will continue to support our operating and financial outperformance,” he added.
Kering has been streamlining its portfolio as it repositions itself as a pure luxury player.
The French conglomerate has engaged in a flurry of house-cleaning moves since the beginning of the year, notably spinning out of the group its stake in Puma, selling its holdings in Stella McCartney and Christopher Kane back to the designers, shuttering the Tomas Maier brand and selling action sports brand Volcom.
Its results come on the heels of a 10 percent rise in revenues at LVMH Moët Hennessy Louis Vuitton in the third quarter. Hermès International, meanwhile, is due to publish third-quarter results on Nov. 7.
This story was reported by WWD and originally appeared on WWD.com.
