Kering shares surge as Gucci sales rebound on new collection

Bloomberg

Kering SA shares rose the most since 2020 after sales at Gucci, the luxury group’s biggest brand, blew past pre-pandemic levels on demand for its latest collection.
A 32% jump in comparable revenue at Gucci during the fourth quarter was almost twice the increase analysts expected. The stock rose as much as 7.9%.
Kering’s results provide more evidence that luxury sales are storming back from the pandemic as well-heeled shoppers crowd back into stores in much of the world.
LVMH SE, the world’s biggest luxury group, last month reported record annual revenue, helped by surging demand for Louis Vuitton bags and Tiffany rings.
“We are confident we will extend last year’s momentum in 2022 and in coming years,” Kering’s billionaire chief executive officer, Francois-Henri Pinault, said in a statement.
The pricing power of luxury brands has cushioned the impact of rising costs for raw materials. At Kering, the recurring operating margin widened to 28.4% last year from 23.9%
in 2020.
Gucci will probably make targeted price hikes in 2022, after boosting prices twice last year and in 2020, Kering Chief Financial Officer Jean-Marc Duplaix told reporters.
The release in late September of Gucci’s Aria ready-to-wear collection helped generate buzz and sales, while the film “House of Gucci,” starring Lady Gaga, drew more attention to the brand.
Led by Chief Executive Officer Marco Bizzarri and Creative Director Alessandro Michele, Gucci represents more than half of Kering’s revenue and close to three-quarters of
earnings.
The brand’s rebound “is important as it breaks a few quarters of lackluster performance relative to peers,” Luca Solca, analyst at Sanford C Bernstein said by e-mail.
On a call with analysts, Pinault said Gucci had a “strong pipeline” for events and products planned for this year, and that he’s “very confident” for the brand’s prospects.
The company was also helped by the performance of Yves Saint Laurent, where revenue soared 47%, outperforming all the group’s other major brands.
Pinault said the brand led by CEO Francesca Bellettini and Creative Director Anthony Vaccarello has more potential ahead, notably in Asia.
Kering’s recurring operating income for the year rose 60% to just over 5 billion euros ($5.7 billion), surpassing the 4.77 billion-euro estimate of analysts.
Pinault told analysts the group’s balance sheet is strong and that it’s actively looking at potential purchases.