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Gucci’s 100th anniversary rebound: as Covid-19 lockdowns ease, shoppers ‘revenge spend’ on luxury fashion and jewellery, with Cartier owner Richemont bouncing back too

Gucci products are displayed in the window of a store on Old Bond Street in London, Britain, in June 2016. Photo: Reuters

Sales at Gucci soared above pre-pandemic levels as the Italian brand lures young shoppers with its social media campaigns and benefits from easing lockdown restrictions.

Gucci revenue jumped 86 per cent on a comparable basis during the second quarter, owner Kering SA said in a statement Tuesday, July 27. Analysts had expected a 77 per cent gain. The performance at Gucci pushed total group revenue in the quarter up 11.2 per cent from the same period in 2019.

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High-end jewellery is displayed at a Cartier store on Place Vendome in Paris, France, in July 2019. Photo: Reuters
Kering follows LVMH and Cartier owner Richemont in publishing stellar results as consumers across the world spend their savings accumulated during lockdowns on luxury handbags, shoes and jewellery. Like those companies, Kering was helped by an easy comparison with 2020, when many stores were shut.

“Performance in the first half is excellent, be it on revenue, but also on the profitability side,” chief financial officer Jean-Marc Duplaix said in a press call, noting particularly good results in Asia Pacific and North America. Kering is “confident” that Gucci’s profitability can improve even further.

During a call with analysts, Duplaix said Kering raised some prices on Gucci and Bottega Veneta products in the past year – a sign that consumers are willing to pay more for the brands.

A pedestrian walks past a closed Gucci store during a lockdown imposed due to the coronavirus in Sydney, Australia, on June 29. Photo: Bloomberg

The rebound at Gucci, which is marking its 100th anniversary, should bring comfort to investors who’d been worried about the steeper slowdown the brand suffered last year. That was in contrast to peers such as LVMH’s Louis Vuitton and Hermès, where revenue recovered strongly once the toughest restrictions had eased.

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Gucci helped generate buzz by releasing a digital fashion show in April with sister brand Balenciaga. The 15-minute video, called Aria, featured equestrian helmets and boots, disco skirts and sequinned jackets with the brands’ logos. The Aria collection will hit stores in the second half, Duplaix added.

Gucci’s sunglasses are seen at the Mido exhibition for glasses and eyewear products in Milan, Italy, in February 2016. Photo: Reuters

The arrival of this new collection, as well as the release of a movie about the Gucci family scheduled for November, will give the brand “more opportunity to impress” in the second half, Luca Solca, analyst at Sanford C. Bernstein, wrote in a note to clients.

Kering’s recurring operating income in the first half rose 135 per cent to US$2.65 billion (€2.24 billion). Analysts had expected US$2.46 billion (€2.08 billion).

A model presents a creation by Balenciaga as part of its autumn/winter 2021-2022 haute couture collections during Paris Fashion Week in Paris, France, on July 7. Photo: Xinhua

All houses contributed to the result, with quarterly sales at Yves Saint Laurent and Bottega Veneta jumping by 118.5 per cent and 69 per cent, respectively, on a comparable basis. Balenciaga and Alexander McQueen also recorded “outstanding performances”, the company said.

While 80 per cent of Kering’s sales come from stores the company directly operates, another fast-growing part of the business is online. During the first half, overall e-commerce revenue soared 78.5 per cent from a year earlier, the company said.

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Gucci generated more than 80 per cent of Kering’s total recurring operating income last year. The luxury goods company’s reliance on its blockbuster brand has led analysts to wonder if Kering will put its financial power to use for a major acquisition, especially after a number of recent deals in the industry.

Salma Hayek and Francois Pinault pose during the Kering Women in Motion Awards at the 74th annual Cannes Film Festival, in Cannes, France, on July 11. Photo: EPA-EFE

Chief executive officer Francois-Henri Pinault said in April that the company could afford to make an acquisition. Earlier this month, Kering made a smaller one, announcing the purchase of eyewear brand Lindberg for undisclosed terms.

The Lindberg acquisition “isn’t exclusive of a more transformational move”, Kering managing director Jean-Francois Palus said during a call with analysts Tuesday, adding that the group remains “very active” watching M&A opportunities.

Duplaix said Kering isn’t currently in the process of selling its watch unit, although it will consider all possible options.

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Gucci
  • LVMH’s Louis Vuitton and Hermès’ revenue strongly recovered, while Balenciaga, Alexander McQueen and YSL contributed to Kering’s success too
  • Kering’s social media campaigns, digital fashion shows and e-commerce sales were key; CEO Francois-Henri Pinault even thinks the company can make an acquisition