Gucci’s struggle to recover fails to mar a triumphant quarter for Kering, says GlobalData

Following yesterday’s release of Kering’s figures for Q3, FY2021; Darcey Jupp, associate retail analyst at GlobalData, a leading data and analytics company, offers her view: “Kering continues to thrive off the luxury resurgence, with revenue growing by €470.1m to €4,187.8m in Q3 FY2021 and comfortably up 7.8% on Q3 FY2019. North America continued to outperform all other regions for the luxury houses, with sales growing 31% vs. Q3 FY2020 and settling 83% up on two year comparatives, as a quick relaxation of COVID restrictions allowed its luxury market to bounce back faster. In contrast, Kering’s home market, Western Europe, remained 32% down on Q3 FY2019, since tourism, which usually makes up a significant portion of luxury sales in the region, struggled to return to pre-pandemic levels. Behavioural changes to luxury shopping initially caused by pandemic restrictions prevail, and Kering has been sensible to continue streamlining its e-commerce platforms to cater to this, with online sales increasing 24.3% year-on-year and up 147.9% on Q3 FY2019.

“70s-inspired clothing trends this summer and the return of social events across its major markets should have fuelled Gucci’s maximalist aesthetic to recovery, however, the brand’s sales remained 8.1% down versus Q3 FY2019, slipping further away from pre-pandemic levels than in H1 (3.0% down versus H1 FY2019). Though the group states that this is partly due to its shift in distribution strategy, reducing its reliance on wholesale, Gucci is also struggling to capture the ever-evolving fashion trends it once had grasp of, driven by its more muted sister brands Yves Saint Laurent and Bottega Veneta, which boasted sales up 28.9% and 27.8% respectively versus Q3 FY2019. While Gucci still accounted for 52.1% of Kering’s revenue, a change in direction may be needed, but Kering hopes its centenary collection in Q4 will be a key launch for the brand.

“While Kering does not give precise figures for Balenciaga, it has stated that the brand experienced rapid growth across all its distribution channels, rising sharply versus Q3 FY2019. 2021 has been a particularly successful year for the brand, as its continued innovations ignite media frenzies and create trends followed by its competitors, notably with the Gucci x Balenciaga ‘hacking’ (collaboration) earlier in the year, and most recently collaborating with The Simpsons to show its latest collection at Paris Fashion Week. If this fierce expansion plan continues, Balenciaga could be the house that takes the crown from Gucci as Kering’s most valuable brand in the future.

“In September, Kering announced it will no longer be using fur from Autumn 2022. While Gucci stopped using fur in 2017, the group will now align its ethical policies across all brands, citing that luxury fashion must follow “the very highest environmental and social values and standards”. This decision draws stark comparisons from its rival group, LVMH, which continues to use fur. As consumers grow increasingly conscious, taking an ethical approach to fashion will act in Kering’s favour, proving its place as one of the industry leaders in sustainability. Adopting further sustainable accreditations, like luxury brand Chloé which recently announced it acquired B-Corp status, will cement Kering’s sustainable stance in the future and continue to satisfy consumers.”