Kering's plan to increase sales goes through the super rich

While LVMH reported a 17% increase in sales to 21.04 billion euros in its quarterly statement, Hermès' sales rose 22% in the same period, despite an average price increase of 7%, reaching 10 % in some regions. Bringing up the rear is the Kering Group, which after a year of scandals and restructuring is now counting on its wealthier customers to catch up with the competition. The French luxury group, which owns brands such as Gucci, Balenciaga, Saint Laurent, and Bottega Veneta, reported on Tuesday that first-quarter sales rose just 2% on revenue of 5.08 billion euros, with a decline in North America and a gradual recovery in China. It was a modest increase after a 2 % in the fourth quarter. Gucci's organic sales rose 1% compared to a 14% decline in the previous three months, impacted by the departure of Alessandro Michele and a transition period as the company waits for Stefano de Sarno to fully take over as creative director next September.

But it is not just Gucci that has historically been the driving force behind Kering's coffers, as the group's other brands also posted mixed results: Bottega Veneta's sales were flat in the first quarter, compared to a 6% increase in the previous three months. Saint Laurent's revenues were up 8%, while the situation at Balenciaga is far more complex following the scandal last November. For the brand under Demna's creative direction, revenues continue to fall 9% after declining 4% in the fourth quarter, mainly in the United States, the United Kingdom, and the Middle East. Bucking the trend, Kering's jewelry brands, including Boucheron and Qeelin, posted double-digit growth in the quarter and sales at menswear brand Brioni were "excellent", underlining the importance of high-end customers. «Kering's first quarter results were mixed, as we expected - chairman and CEO François-Henri Pinault said in a statement released by WWD - As we work to increase the appeal of our brands and raise their profile in key markets, we are encouraged by the gradual month-on-month improvement in the business over the period.

At the heart of Kering's strategy remains the enhancement of the Gucci brand through initiatives such as the launch of the salon, permanent and temporary spaces where the most exclusive clients can order bespoke luggage, exotic leather goods, furniture, and fine jewelry at prices ranging from approximately €40,000 to €3 million, and initiatives to strengthen its influence in the Chinese market with the opening of the Gucci Cosmos Show in Shanghai. The first ultra-luxury salon opened this month in Los Angeles, complete with carpet-fresh outfits. In a conference call with analysts, Jean-Marc Duplaix, Kering's chief financial officer, said the launch had been a "great success" and had helped attract affluent American customers: «The salon concept is similar to high-end jewelry: we know it's not necessarily a game-changer in terms of contribution to sales in the short term. But in terms of image, of targeting key customers who are also brand ambassadors, it is absolutely important to invest in this area.» The Italian brand is in a period of change. As a result, Kering is 'very modest' about its ambitions for 2023: «The work we are doing at Gucci is a journey, not a race, and we do not expect it to bear fruit in the short term. But we are very encouraged by the progress we have made so far, the commitment of all the teams, and the response of the market» Duplaix said.