Kering's share price reached the highest level in 15 years after the group reported a 10.5 percent sales increase on a comparable basis for the third quarter ended Sept. 30, driven by a 17 percent jump for Gucci. Analysts had expected an increase of only 7 percent for the group.
Gucci's flamboyant recovery has been credited to the arrival last January of a new creative director, Alessandro Michele, a new digital strategy and more accessible product offers, targeting younger customers. The popularity of Gucci's women's shoes and ready-to-wear helped the brand to book a 19 percent increase in comparable store sales within its own retail network. The e-commerce business jumped by more than 50 percent for the brand.
Another Kering brand, Yves Saint Laurent continued its strong momentum with a sales increase of 33.9 percent. Footwear and all other product categories contributed to the strong growth. On the other hand, Bottega Veneta suffered another lackluster quarter with a sales decline of 10.9 percent, which was attributed to weak tourist traffic in Western Europe and Japan, but Kering noted that the brand's footwear confirmed its momentum.
The entire luxury division of the group lifted its sales by 12 percent to €2,115 million, with double-digit growth at directly operated stores all over the world except in Japan.
Kering also benefited from the continued recovery of Puma, which posted a currency-neutral increase of 10.8 percent in the quarter, driven by footwear (more on this in Sporting Goods Intelligence Europe).
A strong performance at Louis Vuitton helped LVMH to book a rather unexpected acceleration in its sales growth for the third quarter. On an organic basis, its revenues went up by 6 percent during the period, after increases of 3 percent in the first quarter and 4 percent in the second one.
In particular, the luxury group's Fashion & Leathergoods division, which is led by Vuitton, raised its sales by 5 percent in the quarter after flat results in the first half of the year, with Vuitton enjoying a strong momentum thanks to iconic lines and new models, plus a promising start for its first fragrance. Other brands such as Berluti, Kenzo and Lowe also recorded “solid” growth, the company said.
The management noted that sales to Chinese customers grew at a double-digit rate in the quarter, after stagnating in the first half of the year. They declined in Japan due to a decline in a Chinese tourism. Vuitton's sales recovered in France during the month of September, after declines that were attributed to the terrorist attacks that started a year ago. They grew by more than 10 percent in the rest of Europe, particularly in Italy and the U.K., and they enjoyed a positive trend in the U.S.
Similarly, the Christian Dior brand, which is owned separately, acting as the major shareholder of LVMH, recorded an 8 percent increase in local currencies in the three months ended Sept. 30, reaching a level of €1.8 billion. This compares with a 2 percent increase for its last financial year, ended on June 30.
Hermès International also surprised analysts with a 9 percent currency-neutral sales increase in the third quarter, up from the 7 percent growth registered in the first six months of the year. The increase led the company to book 8 percent higher sales of €3.7 billion for the first nine months.
The group's recovery in the third quarter helped it to record a 5 percent sales increase for the first nine months on an organic basis, reaching a level of €26.3 billion, of which €8,991 million were accounted for by Fashion & Leathergoods.
Good sales of Hermès shoes didn't prevent flat sales of €284 million for clothing of accessories in the quarter, but this came after a drop of 2 percent in the first six months of the year. John Lobb and “other” businesses saw their sales jump by 19 percent in the quarter after a rise of 16 percent in the previous six months.
Across the group, sales fell in France during the first nine months of 2016, but they went up by 9 percent in the rest of Europe. Aside from Japan, sales grew by 14 percent in the rest of Asia, with a positive momentum in Mainland China. They rose by 7 percent in the Americas.