Following yesterday’s release of Kering’s figures for Q3, FY2022; Darcey Jupp, apparel analyst at GlobalData, a leading data and analytics company, offers her view: “Kering’s luxury apparel proposition continued to excel in Q3 FY2022 despite a harsh backdrop of mounting macroeconomic challenges, with group revenue up 22.7% (+14% on a comparable basis) to €5.1bn. The group experienced strong revenue growth of 74% on a comparable basis in its home market of Western Europe, with the region now up 18% against pre-pandemic comparatives as it benefitted from a surge in tourism over the summer months, as US visitors in particular took advantage of the weak euro to buy luxury goods on European soil. This contributed to revenue rising by a muted 1% in North America, but this was against a high comparative of 33% growth, and sales in the region were still an impressive 85% higher than Q3 FY2019.
“Kering’s growth still lags rival LVMH, which saw revenue in its comparable Fashion and Leather Goods division rise 30.0% to €9.7bn in the same period, as it too performed well in Europe despite rising inflation. Yet Q4 could be a challenging period for both luxury conglomerates, with many consumers tightening their belts and planning to reduce Christmas spend, so it will be essential for Kering to buckle down on its product ranges to engage consumers looking to make one-off luxury purchases at Christmas – particularly in key categories such as handbags and accessories. Despite this, Kering’s core clientele will be less affected by macroeconomic pressures, so the group is in a good position going forward.
“The group’s largest brand, Gucci, saw growth of 18.3% this quarter (+9% on a comparable basis), leaving the brand up 8.7% versus Q3 FY2019. While high double-digit growth in the current macroeconomic climate should be cause for celebration, its performance in recent years pales in comparison to Kering’s other named brands, Saint Laurent and Bottega Veneta, which are 80.8% and 53.7% higher respectively than pre-pandemic levels. Both brands have excelled due to their engaging product ranges resonating well with luxury consumers. As a result, Gucci’s share of group revenue has continued to slip, falling 10.9ppts to 50.2% between Q3 FY2019 and Q3 FY2022. Nevertheless, Gucci’s growing portfolio of collaborations shows that it understands how to create viral collections, such as its Adidas partnership that launched in June, and the recent announcement of a collection with cult streetwear brand Palace. However, with the collaborations often at luxury price points, they risk alienating the core customers of the partnering brands, particularly as the cost of living continues to mount.”
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