Sales plunge at Gucci owner Kering as 2020 outlook remains unclear
Luxury group Kering said sales plunged almost 44 per cent in the second quarter due to the coronavirus pandemic, adding it could not provide a forecast for the second half of 2020.
The Gucci owner’s revenue was a touch better than analyst expectations, however, with those at UBS citing estimates for a 46 per cent fall.
Operating margins were hit hard, falling 17.7 per cent.
Kering rival LVMH had managed to limit its own sales decline to 38 per cent in the second quarter, with an operating margin of nine per cent.
Analysts told Reuters the disparity was partly due to Kering’s higher dependence on third-party manufacturing, which helped it mitigate the impact of fixed costs when its factories had to close.
Kering said it did not have enough visibility to predict revenue or profit for the rest of the year, as its finance boss Jean-Marc Duplaix told reporters it would continue to suffer from the lack of global tourism.
“The loss in revenue experienced in the first six months of the year should not be offset in the second half,” the company said.
On a brighter note, Duplaix said sales momentum had picked up in June in all regions as lockdowns eased, with the group’s brands doing particularly well in China.
Average sales growth in the region — a prime market for luxury brands — ranged from 40 per cent to 70 per cent since May.
Chinese shoppers accounted for 37 per cent of luxury goods sales last year, though they made the bulk of their purchases while traveling abroad.
Sales at Kering’s top brand Gucci in the April to June period declined by 45 per cent on a like-for-like basis, which strips out the impact of currency swings and acquisitions.
Yves Saint Laurent suffered an even bigger fall of 48 per cent, while Bottega Veneta contained the drop in revenue to 24.4 per cent.
Kering’s overall online sales bounced, however, to account for 18 per cent of revenue in the second quarter, up from under 10 per cent at the start of the year.
Shares in Kering closed down 2.7 per cent today ahead of the release, dragged down by investors’ disappointment with LVMH’s results earlier in the day.