French luxury group Kering reported its sales hit harder than expected by the Covid-19 pandemic in the first quarter of 2020, as stores shuttered and travel restricted.
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François-Henri Pinault, Chairman and Chief Executive Officer of Kering, said the quarter was marked by strong disparities, with:
- an good start to the year in January, before the epidemic began to spread;
- a contrasting month of February, reflecting store closures in Asia-Pacific;
- a sharply deteriorating situation in March, due to the gradual closure of stores across Europe and the United States, the halt in tourism, and the partial closure of production and logistics facilities towards the end of the quarter.
Kering posted revenue of €3,203.2 million (US$3474.99 million) in the first quarter of 2020, down 15.4% as reported and 16.4% on a comparable basis; however, during March, Kering began to see encouraging signs in Mainland China with the reopening of most of its stores. It is also found that there is a sharp rise by 21.1% in e-commerce for all houses in the quarter.
Gucci was deeply impacted by Covid-19, despite excellent trends early in the quarter. Gucci posted revenue of €1,804.1 million (US$1957.18 million) in the first quarter of 2020, down 22.4% as reported and 23.2% on a comparable basis. Sales from directly operated stores fell 23.8% against an extremely high first-quarter 2019 comparison basis.
Gucci had an excellent start to the year, with double-digit growth in North America in the first two months of the year and another sparkling performance in Western Europe. However, activity levels were hit hard from February onwards due to the House’s strong positions in Asia-Pacific and among Chinese tourists worldwide. Trends in Mainland China are gradually improving since stores began reopening in early March.
Yves Saint Laurent’s geographic footprint helped mitigate the market impact. Yves Saint Laurent reported revenue of €434.6 million (US$471.48 million) in the first quarter of 2020 with down 12.6% as reported and 13.8% on a comparable basis. This relatively contained decrease can be attributed to the house’s limited exposure to the Asian markets, as well as a good start to the quarter in Western Europe and North America. Retail sales in the directly operated store network were down 17.6% on a comparable basis, while wholesale dropped 5.7%.
Bottega Veneta posted a remarkable performance in the first three months of the year, with revenue up 10.3% as reported and 8.5% on a comparable basis, to €273.7 million (US$296.92 million). Retail sales in directly operated stores remained broadly unchanged (down 0.9%) despite the exceptionally unfavorable market context. The house’s collections met with resounding success among local customers in North America (up 31.3%) and Western Europe (up 25.4%), but sales were down in Asia-Pacific and Japan. Wholesale was up a strong 55.1%.
“My confidence in Kering’s future lies in the strength and values of our Houses, which will all emerge from this period of uncertainty at the top of their game, as well as in our ability to blend long-term vision with near-term imperatives,” said François-Henri Pinault, Chairman and Chief Executive Officer of Kering.