Kering results: Gucci A+, YSL A++, Bottega Veneta – must try harder

gucci ss16 ad 3Is Gucci’s success a flash in the pan? Can YSL survive the shock departure of Hedi Slimane? Is Bottega Veneta still the quiet star it’s been for years?

All these questions and more will be answered right here. OK, it’s not hard: the answers are ‘no’, ‘no’, and well… ‘no’. Gucci and YSL are storming ahead but Bottega Veneta is finding it tough.

Kering gave us its first half figures late yesterday and what a set of figures it was. Inside an announcement that looked quite respectable we saw some amazing performances.

The headline figures showed revenues up 3.3% to €5.7bn and operating income up a respectable 4.9% to €811m. And Q2 comp sales rose 6.9% while the group’s fashion brands rose 5.2%.

Just think about that in relation to LVMH’s figures a few days ago and everyone else’s so far this year. Luxury is in a slump, many firms are happy with just a 1% rise in current circumstances and that makes those ‘respectable’ numbers quite spectacular.

Go Gucci go


Gucci pre-fall 2016 campaign

But there’s more… Gucci saw Q2 organic (ie currency-neutral and comparable) sales up 7.4% despite the year-ago period providing it with some tough comparisons. For H1, comp sales rose 5.4%.

Demand was strong globally. European consumers were the first to catch on with a 20% H1 sales rise, but the rest of the world is waking up too and mainland China sales are rising. Analysts had been expecting a rise but nothing like that.

And profits got a huge boost. Recurring operating income at €537m was driven by an 80 basis points surge and rose 7%, which means that not only is Gucci selling much more product, but what it sells is more profitable too. And the company is going to raise its prices a bit more this year so those profits should keep rolling in, with little chance that higher prices will dampen customers interest.

Let’s hope Alessandro Michele has just been given a massive pay rise.

YSL: Shooting star

saint laurent SS16 ads 2

Saint Laurent SS16 ad

Of course, the architect of YSL’s renewed success can’t get a pay rise as he’s just left, but Hedi Slimane can feel some satisfaction over a 24% H1 sales leap at the brand to €547.9m and an 80% surge in operating income to €109m.

In a model of understatement, Kering said all this was “very good”. But while that may seem a little unenthusiastic, the company did have some bad news to report too with Bottega Veneta the kid in the corner wearing the dunce’s cap.

Bottega Veneta, which was once rivalling Gucci for growth (and looked like it might have one day rivalled it in size), saw Q2 sales down 9.8% after an 8.3% Q1 fall. That meant H1 sales fell 9.2% to €571.2m. And operating income dipped 19.4% to €145.1m, after having dropped 35% a year ago. 

So what’s the problem? Around 70% of Bottega’s customer base is from Asia and with fewer Asian tourists in Europe, sales suffered. The company also made some mistakes on the style front and failed to address the trend for smaller bags, although shoes proved strong. It also seems that Michele and Slimane have shaken things up so much that a more evolutionary, understated brand like Bottega is seen as offering too little newness, Kering said.

So, as well as renewing the product offer, the company is going to boost in-store display and revamp its website.

‘Other Luxury’ brands (that’s McQueen, McCartney, Christopher Kane, Brioni and the luxury jewellers Boucheron and Pomellato) also struggled to find growth and sales there fell 0.5% in H1 to €811m, although they were flat at comparable exchange rates. But profit dropped sharply. It looks like Brioni was the big problem as it works through a restructuring, and while jewellery sold well, watches struggled.

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