23 Oct 2020
Posted in Retail
Kering displays resilience thanks to Bottega Veneta’s success and US and Asian demand
Following today’s release of Kering Q3 figures for 2019/20, Chloe Collins, Senior Retail Analyst at GlobalData, a leading data and analytics company, comments:
“Despite the COVID-19 crisis continuing to hit the luxury fashion industry hard, as a result of tourism restrictions and economic uncertainty, Kering has showcased impressive resilience. Revenue between July and September only declined by €166.9m to just over €3.7bn, trumping rival LVMH’s performance for the same period where revenue fell 7% versus last year. Kering’s star performer throughout the period, and the year so far, was Bottega Veneta, which saw growth of 17.0%, with huge jumps in online and wholesale revenue. Core brand Gucci, which made up c.56% of group revenue, had a much tougher time however, with sales declining by 12.1%, mainly due to a 31.6% contraction in wholesale revenue as the brand focuses more on its direct-to-consumer sales channels –a wise move but one that will take time to bear fruit.
“Western Europe suffered from the biggest drop in demand, with revenue down 41.0%, as key markets such as Spain and France experienced second waves of COVID-19, and capital cities such as London, Paris and Milan failed to recover lost spend from tourists. Surprisingly, North America experienced a strong rebound with revenue up 44.1%, despite its high prevalence of cases, while sales in Asia benefitted from the region’s ability to quickly suppress the virus, especially in China, with revenue up 18.5%. Q4 will undoubtedly prove more challenging for the group, as the winter speeds up COVID-19 transmissions and more lockdowns and potential store closures loom. Online developments must be a core focus for the group, as though online sales grew 101.9% in the quarter, ecommerce has only accounted for 12.5% of group retail revenue so far this year, proving more digitalisation is needed to fully convert luxury shoppers to the channel.
“Kering has shown its commitment to sustainability and the environment through its involvement with The Fashion Pact, Gucci’s ‘Off The Grid’ collection and partnership with resale platform The RealReal, and the appointment of influential activist Emma Watson to its board in June 2020. While its efforts are promoted heavily throughout the group’s social media sites, it should ensure it also highlights these more prominently through each of its individual brands’ social media accounts and websites, to maximise awareness and impact.”