Kering’s return to luxury reaps the rewards

LUXURY FASHION group Kering posted better-than-expected sales growth in the fourth quarter and said 2018 should be another solid year as it refocuses its business solely on luxury.

Kering, which owns Gucci, benefited from a recovery in demand from Chinese consumers at home and overseas last year while rising online sales have also propelled growth.

That trend should continue this year with strong momentum at Kering fashion labels including star performer Gucci and Balenciaga, though the group cautioned that currency swings and a strong euro could weigh on its performance.

Analysts gave generally positive reactions to Kering’s results, but Exane BNP Paribas said the company might find it harder to come up with even stronger results in future.

Francois-Henri Pinault, chairman and chief executive of Kering, said: “Kering delivered a phenomenal year in 2017.”

He added that the global environment remained uncertain but that Kering could do “much better than our markets” in 2018.

Kering, which also owns Yves Saint Laurent, has reaped the rewards from an overhaul at Italian fashion house Gucci over the past two years and revamping itself to focus solely on its luxury credentials.

The group has plans to spin off 70 per cent of its sportswear brand Puma to its own shareholders, which includes the Pinault family, through its Artemis holding.