Luxury group Kering‘s fourth quarter sales were hit by a continued slump at its main brand Gucci, it said on Tuesday, but a slight improvement in the group’s performance in major markets China and the United States buoyed investors. Shares in the French group jumped 5% in early trade as investors seized on hopes the company had reached an inflection point.
KERING
Kering’s sales fell 12% in October-December on a comparable basis from a year earlier, dragged down by a 24% drop at Gucci, but in line with expectations, according to a Visible Alpha consensus cited by UBS.
“These results should reassure investors that trends are modestly improving against low sentiment and favourable positioning,” analysts at RBC said in a note. Kering CEO Francois-Henri Pinault, in a statement, said the group has reached a “point of stabilization, from which we will gradually resume growth”.
“Gucci will come back. I have absolutely no doubts about this,” Pinault told analysts on a call.
In his first major move since becoming Gucci CEO in January, Stefano Cantino sacked Gucci designer Sabato de Sarno last week as part of efforts to revive the label, which accounts for nearly half of group sales and about two thirds of recurring operating profit.
“With the new CEO apparently willing to make bold changes including changing creative director, we believe the worst may be behind us, although the timing for a potential reset remains unclear at this stage,” added the RBC note.
Kering shares were up 2.5% by 0906 GMT.
Gucci’s fourth quarter sales tumbled 24% from a year earlier, as the label’s aesthetic overhaul failed to win new business.
Analysts do not expect Gucci to rebound until next year and have said the recruitment of a new designer could slow progress given that stores are filled with De Sarno designs.
Pinault said the design change would not slow the brand’s turnaround, while deputy CEO Francesca Bellettini said a new designer would be announced promptly, “sooner rather than later”.
Kering’s efforts to turn around Gucci with a new, minimalist design approach from De Sarno, who took up the position two years ago, were complicated by a global slump in luxury demand.
The industry’s sales rate is the slowest in years, and consultancy Bain & Company estimated luxury sales fell 2% globally last year, weighed down by a property crisis in China – a major market for Gucci.
Finance chief Armelle Poulou told reporters that Kering’s sales in mainland China and among Chinese shoppers globally rose by a combined 6 percentage points compared with the third quarter, while U.S. sales also increased.
Previously one of the industry’s biggest success stories, with soaring growth in the 2016-2020 period, fuelled by baroque, gender-fluid designs from Alessandro Michele, Gucci fell behind when shoppers’ tastes shifted.
Rivals, including LVMH-owned Louis Vuitton and Dior, meanwhile, successfully tapped into the strong, post-pandemic surge in demand for fashion.
Full year recurring income from group operations came to €2.6 billion, slightly higher than Kering guidance in October for €2.5 billion.
Kering’s 12-month price-to-earnings ratio, based on projected earnings, is 19, behind LVMH at 24 and Moncler at 25, as well as Burberry, which is currently undergoing a revamp under new management and has shot up to reach 60, LSEG data shows.
Mytheresa results are always closely watched and now that it’s buying YNAP, it’s even more in the spotlight. So what did Tuesday’s report tell us about what will this year become just about the top global luxury e-tailer?
DR
For a start, its performance is improving and it’s getting closer to absolute profitability. It saw double-digit net sales growth with a 13.4% year-on-year rise in Q2 of FY25 (the 12 months to June this year). And it enjoyed continuous US expansion with 17.6% net sales growth in the quarter.
Also, there was “GMV per Top Customer” growth of 13.6 % and average order value rose 9% to €736. The company puts a lot of time and money into special top customer events and in making big-spenders feel that splashing the cash on its site is really worth it. For the latest quarter think ‘money-can’t buy’ experiences in partnership with luxury brands, including a mountain experience with Zegna and anexclusive two-day Nordic winter experience with Moncler Grenoble in Oslo!
The numbers
So, let’s get into the details. The quarter that covered October to December saw net sales rising to €223 million from €196.6 million. During the first half as a whole net sales had risen 10.6%, so the Q2 13.4% rise means growth accelerated in the second quarter in particular.
Overall general merchandise value (GMV) increased 11.9% to €244.7 million in Q2.
Profits-wise, it saw a strong gross profit margin of 50.9%, a rise of 110 bps, while adjusted EBITDA was €16.2 million, up from €7.5 million a year ago, with an adjusted EBITDA margin of 7.3%.
Adjusted operating income for the quarter was €12.2 million, much better than €3.7 million 12 months earlier.
On an absolute basis, the company remains loss-making, but the net loss this time was only €4.7 million, narrower than €5.8 million a year ago and much lower than the €28.2 million loss made for the first half as a whole.
As mentioned, the company enjoyed progress in the US and among its highest-spending customers as it launched exclusive capsule collections and pre-launches in collaboration with Khaite, Alaia, Saint Laurent, Loewe, Gucci, Miu Miu, Moncler, Bottega Veneta and more.
It continued the expansion of its fine jewellery offer with the launch of the Bulgari brand online, “supporting ongoing top customer focus and high-value item growth”.
It all means that for the full year, the company (which is changing its name to LuxExperience to reflect its multi brand status when it acquires YNAP) expects GMV and net sales growth in the range of 7% to 13%. It also expects an adjusted EBITDA margin in the range of 3% to 5%.
CEO Michael Kliger said of all this: “We are very pleased with our results in a still-volatile macro environment. With strong, accelerating revenue growth and positive, significantly improved adjusted EBITDA margin in the second quarter, we continued our very positive business momentum from the previous quarters and have achieved a significant step up in financial performance in H1 of fiscal year 2025 compared to H1 of fiscal year 2024.
“We have reaffirmed our leadership position in terms of financial performance and reputation in digital luxury. Our clear focus on the high-spending, wardrobe-building top customers sets us apart and allows us to win market share and grow profitably. Strong Top Customer revenue growth, an outstanding average order value and excellent customer satisfaction scores demonstrate our relentless customer focus which is a key success factor for Mytheresa.”
UK fashion brand Celtic & Co is stepping up its international profile, expanding its digital presence in the US. This comes via the launch of its spring collection at major department store chains Nordstrom and Macy’s.
Celtic & Co
It said its SS25 collection, featuring 178 pieces across the season, will appear on the retailers’ websites by the end of February.
Zoe Bray, managing director at Celtic & Co, said: “The US is our biggest international market outside of the UK, and being available online with Nordstrom and Macy’s will help us reach new customers and provide learnings to be able to expand our presence in the US even further.”
The Nordstrom/Macy’s partnerships comes about following a tie-up with global e-commerce platform Refined Networks, which helps launch fashion brands in major digital markets around the world to help grow their digital sales abroad.
Ian Wallis, managing director at Refined Networks, said he was “excited to welcome Celtic & Co to its portfolio of fashion brands”, which also includes United Colors of Benetton, Sisley, Eton and Petit Bateau.
“Combining strong British heritage design with ethically sourced, natural fibres, this pioneering brand has paved the way towards a more sustainable fashion industry – and we know their story will resonate just as much with US shoppers,” he said.
Luxury department store Harrods has appointed Incubeta to manage its global digital marketing. The partnership will cover all omnichannel operations but will specifically focus on “accelerating digital growth and footfall” for the luxury retailer among its highest-value customers across key markets. This includes the UK, US, Saudi Arabia, United Arab Emirates and further markets in Asia.
Harrods
Covering pay-per-click (PPC), SEO, paid media, and digital PR, the relationship aims to maximise the return from its digital investment “to drive sales” across its London, Knightsbridge store, online, app, rewards loyalty programme and its five UK-based H Beauty stores.
Incubeta aims to achieve this via its artificial intelligence (AI)-powered ‘Seamless Search’ platform.
“By analysing multiple data signals in real-time, this aims to ensure that Harrods’ digital spend is allocated with precision, optimising each campaign for maximum efficiency and impact”, it said.
Additionally, Incubeta will work closely with Harrods to leverage partnerships with brands.
Sandra Truesdale, Head of Digital Marketing at Harrods, said: “The growth and evolution of our digital marketing channels are essential for Harrods to meet the needs of luxury shoppers today, while staying ahead of the ever-changing landscape. Incubeta understood the strategic imperative to deliver a data- and insight-led approach that enables us to meet our global business profitability goals for omnichannel customer growth.”
Andrew Turner, MD, Incubeta UK, added: “We are delighted to be coming on board to deliver the next phase of digital acceleration for the brand. By integrating core elements of marketing into a single, connected strategy, we’ll deliver a smarter and more effective omnichannel experience for Harrods’ global audience.”
Entertainment8 years ago