Gucci turnaround powers Kering to profits growth

Revenue was boosted by Alessandro Michele’s first collection

Fashion designer Alessandro Michele at Milan Fashion Week last year (AFP)

The luxury goods giant Kering yesterday strutted into London Fashion Week in good spirits after revealing that its Gucci division has returned to growth. Kering has been trying to revitalise the Italian brand, which counts £4,540 python print trench coats among its products.

A turnaround plan has gained momentum and Gucci sales reached €1.1bn (£850m) in the final quarter of last year, up 4.8 per cent on the same period in 2014 and ahead of the 1.5 per cent rise expected by analysts. That follows management changes last year in which Marco Bizzarri was appointed Gucci chief executive and Alessandro Michele creative director.

Revenue was boosted by Mr Michele’s first collection, which was unveiled in New York last June and has been available in stores since October.

Luca Solca, a luxury goods analyst at Exane BNP Paribas, said: “Gucci’s management is both expedient and on the right track. Gucci has come in with a significant number of new styles that are starting to turn heads.”

Kering forecast that the strong momentum will continue, saying: “At Gucci, the changes put in place since 2015... will be stepped up.”

The performance contributed to full-year revenue growth at Kering of 15.4 per cent on a reported basis to €11.6bn. Net profits rose by nearly 32 per cent to €696m.

Yves Saint Laurent was one of the strongest performers for the group, which also owns the Alexander McQueen label. Its sales came in at just under the €1bn mark.

Meanwhile Kering’s sports and lifestyle division reported a 13.5 per cent revenue increase.

High tourist traffic in stores and growth in Western Europe and Japan were also noted, but the group was not immune to the pressures in the luxury goods sector.

A number of companies have taken a hit from both reduced demand in China and currency swings. Burberry said last month that sales had slumped more than 20 per cent in Hong Kong in the three months to 31 December, while Prada said earlier this week that the Chinese market remains negative.

François-Henri Pinault, chief executive of Kering, said: “These results come amid a more complex economic and geopolitical environment, accentuating the shifts taking place in our sector.”

Sales in emerging countries were mixed, with poor market conditions in Hong Kong and Macau. Kering also said sales in its watches business had been affected by a “lacklustre market and the sharp appreciation of the Swiss franc”.