Gucci is the cream of the crop in Kering’s strong third quarter
Select language to see a machine translation of this article. The original language of the Article is English and the translation is provided for your convenience.

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

gucci2610

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%.

Disclosure

Dominion holds Kering in its Global Trends Luxury Fund.


If you would you like to receive the Newsfeeds daily, please click here to sign up now!

Help us make this Newsfeed better by rating this article. 1 star = Poor and 5 stars = Excellent
0.0/5 rating (0 votes)

Disclaimer
The views expressed in this article are those of the author at the date of publication and not necessarily those of Dominion Fund Management Limited. The content of this article is not intended as investment advice and will not be updated after publication. Images, video, quotations from literature and any such material which may be subject to copyright is reproduced in whole or in part in this article on the basis of Fair use as applied to news reporting and journalistic comment on events.