Gucci is the cream of the crop in Kering’s strong third quarter
Kering saw fantastic results across the board in its third quarter, beating sales forecasts and painting a positive picture for the luxury sector’s imminent earnings season. Investor sentiment was buoyed by the news, and Kering saw its share price increase by 5.7% on the day. In fact, market watchers were so impressed that Kering’s main rival, LVMH, also saw its share price rise by 0.8% - clearly, Kering remains a bellwether for the industry.
After a great year so far, Kering’s earnings sent its share price even higher this week
SOURCE: Yahoo Finance
In the three months to the end of September, the French luxury giant’s revenue rose by 23%, to €3.9 billion. On a like-for-like basis, which removes the effects of currency swings and mergers and acquisitions, this is 28.4% against the same quarter last year. Reuters says that analysts expected, on average, 20% - not even close. Still, the 5% dent in Kering’s bottom line is indicative of the one headwind facing it at the moment: currency effects. A strengthening euro won’t benefit Kering, which is based in Europe but sells worldwide.
Growth prospects remain strong, and the company isn’t worried about these unfavourable currency effects. Chief financial officer Jean-Marc Duplaix said: “the overall environment remains conducive for luxury goods and we are still well-positioned to continue out-performing the industry.”
Gucci was the standout performer for the quarter, with revenue increasing 42% year on year to €1.5 billion. JP Morgan analysts said in a note: “a good quarter for the industry but still very polarized, with Gucci clearly leading the momentum at five times the sector growth.” Citi analysts referred to it as “the ‘it’ brand”. And its fortunes were even better in Asia Pacific, where it saw sales increase by 55%.
Dominion holds Kering in its Global Trends Luxury Fund.
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