Kering Q1 Earnings Strong... "Need to Confirm Additional Growth of Gucci"

Sales Growth Lagging Compared to Major Competitors

[Asia Economy Reporter Minji Lee] As Kering showed sales growth mainly in the Asian region and the U.S. market, opinions have emerged that further growth of Gucci is necessary for additional stock price increases.

According to the industry on the 24th, Kering recorded total sales of 3.89 billion euros in the first quarter, growing 25.8% year-on-year, showing year-on-year growth for the first time in four quarters.

Looking at sales by luxury business division, Gucci's sales reached 2.17 billion euros, up 24.6% during the same period. Gucci grew 78% and 51% respectively in the Asian region excluding Japan and the U.S. In Europe, sales declined about 36% due to the absence of overseas travelers and store closures.

Jaeyim Kim, a researcher at Hana Financial Investment, said, "It is encouraging that major brands rebounded with triple-digit growth by expanding the new customer base in China as marketing and promotions were concentrated after the end of the year," adding, "In the U.S., store traffic has not recovered to pre-COVID-19 levels, but the expansion of customer age groups led to an increase in average selling price (ASP)."

As overall demand for luxury consumer goods rose in Asia and North America, other luxury brands also performed well. Saint Laurent recorded 517 million euros and Bottega Veneta 328 million euros in the first quarter, growing 23% and 24% year-on-year, respectively. Saint Laurent grew about 46% in the North American sector, and Bottega Veneta grew 83% in the Asian region.

The online sales sector grew about 108% year-on-year. This is attributed to proactively building online platforms ahead of competitors. Eunhye Lim, a researcher at Samsung Securities, said, "North America and Asia grew 134% and 114%, respectively, showing triple-digit growth," adding, "Online sales accounted for 14% of total sales."

However, the wholesale business restructuring is negative. Gucci is strategically reducing the wholesale proportion, which is positive in terms of mid- to long-term profitability improvement and strengthening logistics control. However, negative effects due to the transitional phase are expected to continue for the time being.

Gucci's sales showed signs of rebound in the Asian region, but global sales growth is still lacking compared to major competitors. In the past, it showed high growth leading the industry, but recently recorded a 12-month forward price-to-earnings ratio (PER) of 26 times, trading at a discount compared to the industry average (31 times). Researcher Jaeyim Kim said, "It needs further confirmation whether this is due to the adjustment of the wholesale business or the reaction to new designs," and explained, "A definite rebound of Gucci is necessary to expect a meaningful rise in stock price."

This content was produced with the assistance of AI translation services.