On Tuesday, French luxury giant Kering announced its third quarter 2021 financial results (ending September 30, 2021). Gucci, a flagship brand that accounts for more than half of the group's revenue, saw sales growth slow and fall short of analysts' expectations. But after the earnings report, Kering's shares first suppressed and then rose, closing on Wednesday down only 0.58% from the previous session to 646.60 euros per share. This is mainly due to the solid performance of the Other Brands of the Group, in particular the rapid growth of Saint Laurent:
In the third quarter, Saint Laurent sales increased by 27.8% year-on-year to EUR 659.2 million, an increase of 28.1% on a comparable basis. Comparable sales increased by 32% compared to the same period in pre-pandemic 2019.
In addition, according to Kering, the sales scale of the Balenciaga brand has reached the level of another major brand, Bottega Veneta, which means that it has exceeded 1 billion euros in annual sales.
Saint Laurent's direct retail sales accelerated to 66% of total brand sales, a segment of which grew 31% from the same period last year and 37% over the same period in 2019.
Saint Laurent's retail growth in North America and Europe was particularly impressive, with growth of 75% and 35% respectively. The brand's strength in Europe can be attributed to the fact that Creative Director Anthony Vaccarello has built a strong reputation in this market and has successfully implemented a targeted communication strategy.
Saint Laurent's retail sales in Asia grew by an average of 2 percent, with Japan up 1 percent and other regions up 37 percent. The Asia-Pacific region accounts for 22% of Saint Laurent's total sales, with Japan accounting for 4% of total sales. Over the past few quarters, Saint Laurent's popularity in Asia has grown thanks to store expansion and a strong reputation among local customers. As Jean-Marc Duplaix, Kering's Chief Financial Officer, said on the results call, "The resilience in the Asia-Pacific region underscores the growing awareness of the brand, and Saint Laurent still has great potential in the Region." ”
Saint Laurent's wholesale sales rose 22 percent, with the third quarter primarily selling the Fall 2021 womenswear collection. Jean-Marc Duplaix explains: "With the best strategy, Saint Laurent is working to make this distribution channel more exclusive."
Saint Laurent performed well across all product categories, with double-digit growth in each category compared to the same period in 2019. Jean-Marc Duplaix adds: "Ready-to-wear attracts more and more local customers to our stores. Classic products continue to shine, and new products also perform well. Overall, it was a very good quarter, with Saint Laurent's effective local communication and unique style translating into consistent results. ”
Jean-Marc Duplaix also highlighted that Saint Laurent has successfully achieved sustained growth over the past few years, saying that Saint Laurent has "slightly increased penetration in some markets.". Opening new stores has fueled this growth, but it's not the only factor. "From an organic point of view, growth in all regions is very strong compared to 2019. Globally, its growth strikes a balance between exchange rate changes and geographic expansion. ”
Kering's "Other Brands" division, which includes Balenciaga and Alexander McQueen, saw sales increase by 26% year-on-year to €843.7 million in the third quarter, compared to €612.3 million in the same period in 2019. Jean-Marc Duplaix noted, "The growth (of the division) has been very stable over the past two years, especially thanks to the continued expansion of Balenciaga and Alexander McQueen. ”
Kering does not publish Balenciaga's data separately, but Jean-Marc Duplaix said Balenciaga has reached the level of Bottega Veneta, which is achieved when Balenciaga is still mainly distributed through multi-brand retailers and e-commerce. In the third quarter, Bottega Veneta sales increased by 9.3% year-on-year to EUR 363.4 million.
Jean-Marc Duplaix further explained that Balenciaga restarted the haute couture business after 53 years and the brand's creative director Demna Gvasalia launched a highly acclaimed new collection that had a significant impact on brand recognition. Balenciaga weakened its reliance on sneakers and casual wear, and sales of formal footwear, ready-to-wear and leather goods increased.
As of Friday's Paris stock market close, Kering's shares closed at 646.10 euros, up 8.7% year-on-year, but still 18.1% lower than the record peak of 792.1 euros on August 12 this year.
Kering Group's latest quarterly report is fully interpreted, see "Gorgeous Chronicles" for details