Gucci sales up 28%in Q4 2018
PARIS: Kering’s Gucci label continued to outpace competitors in the fourth quarter, giving another signal that Chinese appetite for luxury goods remains healthy.
Fourth-quarter sales at Gucci rose 28% on an organic basis to €2.3bil
(US$2.6bil), Paris-based Kering said. Analysts expected 27% growth.
The last of the major luxury-goods makers to report for 2018, Kering wraps up an unusually strong earnings season for the industry.
The Gucci owner confirmed a trend seen at LVMH and Richemont, which indicated the Chinese are still buying high-priced items, but more on their own turf rather than on trips abroad.
Facing a trade war with the US and a slowing economy, the government has been trying to promote more consumption in mainland China amid reports of tougher controls on undeclared imports.
Demand from Chinese clients remained “extremely dynamic,” and the “trend remains excellent” on the mainland, chief financial officer Jean-Marc Duplaix said on a call with reporters.
The stock fell 3.7% as of 9:01am in Paris yesterday, having gained 24% in the past year. Expectations on luxury goods companies rose after LVMH’s leather-goods sales growth trounced estimates in late January.
Sales of iPhones and Volkswagen cars have taken a hit as the Chinese economy slows, but shoppers have yet to cut back on the high-end handbags and sneakers.
Kering’s profitability jumped 5 percentage points to 28.9% in 2018, helped by the spinoff of Puma to investors, which gave them the chance to dump the German sportswear brand while hanging onto their share of Kering’s high-end portfolio.
Still, Kering’s growth engine has had some hiccups this year after Gucci’s rapid pace of sales growth gradually decelerated throughout 2018. Kering has said that Italian authorities considerws the brand
€1.4bil, underpaid taxes by though the company disputes the finding.
Gucci’s US$500 pink sunglasses and US$1,500 monogrammed canvas totes aren’t the only thing driving Kering’s rapid growth.
Yves Saint Laurent grew by double-digits and Balenciaga is
€1bil approaching in annual revenue, Duplaix said.