Gucci Sales Growth Slowed Down Into "Normalization", Chinese Consumers Contribute 35%

Chinese consumers' strong demand for Italy's luxury brand Gucci (Gucci), the strong growth of Yves Saint Laurent (Saint Laurent) and Balenciaga (parisenjia) and other brands promoted its parent company, the French luxury giant cloud group (Kering) in the first quarter of fiscal year 2019 exceeded expectations. However, the price of Kai Yun group fell by 3.5% after the quarterly report (Thursday), thanks to the decline in global sales growth of Gucci.

As of the first quarter of 2019 fiscal year ending March 31st, the key financial data of Kai Yun group are as follows:

Sales grew by 21.9% to 3 billion 785 million euros, excluding the impact of exchange rate fluctuations and M & A spanactions, an increase of 17.4%, slightly higher than analysts' expectations.

All distribution channels showed an upward trend, and the sales of direct outlets increased by 18.6% over the same period last year.

Growth in all regions, especially in the Asia Pacific market, increased by 29.6% over the same period last year.

Wholesale network sales grew 12.2% year-on-year.

Online sales continued to rise.

Kai Yun Group CEO Francois-Henri Pinault said in a statement that in the first quarter, the performance of Kai Yun group was still better than that of its peers. "In addition to our strong performance in the first quarter of fiscal 2018, Gucci, Yves Saint Laurent and other brands have excellent sales growth driven by the innovation of highly innovative products and management teams. Although Bottega Veneta is still in the "restore factory settings", it has already shown signs of exhilarating. The flexibility of our core organization enables us to continue to achieve stable, sustainable and profitable growth.

Gucci

Sales grew by 24.6% to 2 billion 326 million euros, excluding 20% after the impact of exchange rate fluctuations.

Direct store sales increased by 20.3%, of which Asia Pacific market was outstanding, sales increased by 35.5%, Japanese market sales increased by 15.8%, and Western European market sales increased by 11.9%.

Wholesale channel sales increased by 16.1%

It is not hard to see that, compared with the explosive growth of the previous two years, the current growth rate of Gucci has slowed down and entered the stage of normalization. Although the growth rate is still higher than that of rival LVMH group flagship brand Louis Vuitton (LV), it has not been as fast as 28% in the fourth quarter of fiscal 2018, compared with 48.7% in the same period last year.

What triggering external concern is whether Gucci will continue to maintain high growth in the future after being spanformed into Alessandro by Michele, the incumbent creative director of the brand. Although its brand Yves Saint Laurent and Balenciaga are also growing rapidly, Gucci is still the main contributor to sales and profits of Kai Yun group. In fiscal year 2018, Gucci contributed nearly 61% sales and 83% operating profit to Kai Yun group.

Jean-Marc Duplaix, chief financial officer of Kai Yun group, said: "the market has anticipated the normalization of Gucci growth, and we remain normal about this."

Francois-Henri Pinault said that Gucci will expand naturally at a "less amazing speed". Over the past four years, Gucci's business scale has more than doubled, and sales in fiscal 2018 increased 33.4% to 8 billion 285 million euros over the same period last year.

In the first quarter, sales in the US Gucci market declined, but Chinese consumers continued to drive brand growth. Although Kai Yun group has a constant focus on the "normalization" development of the brand, multiple factors have affected the performance of the brand in the North American market. In the first quarter, sales of the luxury sector of Kai Yun group increased by 7% in the North American market. Gucci retail sales in North America increased by 5% over the same period last year.

Jean-Marc Duplaix said the high contrast base, declining visitor numbers, declining consumer confidence and delayed delivery of some products were the main reasons for the poor performance of Gucci in the US market. "(US market performance) is affected by multiple factors, but so far there has been no panic. We still have confidence in the performance of the North American market. We are strengthening the product classification and sales plan in the US market. There is nothing to worry about at the moment. "

In March 2019, African American fashion bloggers wrote the word "Happy Black History Month Y" all, calling Gucci's "red lips" black high necked sweater as "black faced (blackface)". Celebrities including hip-hop singer T.I. blamed racial discrimination. Later, Gucci apologized and put off the product. In March, Gucci launched a global project called Changemakers, which aims to support the spanformation of the fashion industry, promote racial unity through community action, and build a culture of inclusiveness. (see "ornate ambition": Gucci launches Changemakers project: three initiatives to build inclusive culture and promote racial unity through community action)

Jean-Marc Duplaix pointed out: "Gucci to the whole open cloud group has made the best handling of this incident. We launch related activities to integrate diversity and inclusiveness into our key decisions. We can not relate the performance of the US market to this event. I do not believe that it ultimately has a substantial impact.

According to Jean-Marc Duplaix, the growth of Gucci brand clothing and footwear has begun to slow down, and demand for bags and small leather goods is still strong. "We have entered the normal development of these categories, but we are very confident in the new products under way. Gucci team is striving to build up pillar products while striving to innovate and promote brand growth." Gucci has begun to expand product categories, such as home accessories, make-up and premium jewelry, to drive the brand's sustainable growth in the future. In August 2019, Gucci opened a new Instagram account @guccibeauty, and announced in December 2018 that it will launch the first premium jewelry series this year. (see "ornate ambition": Gucci or will exert "beauty makeup": Open Exclusive Instagram account, talk about art only, do not sell products! And expand the new category! Gucci will launch its first premium jewelry series next year.

In the Chinese market, which has attracted much attention in the luxury industry, Jean-Marc Duplaix pointed out that although luxury consumption of Chinese consumers began to flow back to the mainland, its luxury consumption expenditure showed no signs of slowing down. China's mainland market has been particularly active in the first quarter, thanks to policies such as consumer reflow and government import tax reduction. Jean-Marc Duplaix expects Chinese consumers to contribute 35% of Gucci sales this year. "Chinese consumers have a very high thirst for our brand."

In the first quarter, Gucci added a total of 4 stores, which means that the brand will continue to focus on improving store efficiency. Continue to integrate the retail concept put forward by brand creative director Alessandro Michele into its boutique. "Gucci will continue to implement its strategic plan and win market share in the future. The development of brand is intended to promote sustainable growth, while focusing on improving the volume of retail sales in all regions, and the most important is the conversion rate.

Fran? Ois-Henri Pinault said that the group's medium-term goal is to promote Gucci brand growth in the overall growth rate of the luxury industry by two times. Bain expects that personal luxury spending is expected to grow by 5% in 2019. According to this calculation, Kai Yun Group expects Gucci growth to slow down to about 10%.

Yves Saint Laurent

Sales grew by 21.9% to 498 million euros, excluding the impact of exchange rate fluctuations, an increase of 17.5%.

Direct store sales increased by 21.7%, and all markets increased by two places, of which the Western European market increased by 25.3%; the North American market increased by 21.3%; the Asia Pacific market increased by 20.9%;

Wholesale channel sales increased by 8.2%

Kai Yun group pointed out that the brand in the 2019 fiscal year was "stable at the beginning" and "balanced growth" in all regions, and the brand clothing and accessories series was very popular. "Leather products show outstanding performance, new product line performance is excellent, follow-up products have also been widely successful."

Bottega Veneta (Bao butterfly house)

Sales fell 5% to 248 million euros, excluding the impact of exchange rate fluctuations, down 8.9%.

Sales of direct outlets declined, and sales of wholesale outlets declined slightly.

In June 2018, Daniel Lee, the chief designer of the C garments line garment designer, was the new creative director. He is leading the brand spanformation. The main product of his design is expected to enter the brand store in 2019.

However, after the launch of Daniel Lee, the two bags of Maxi Cabat and Pouch sold out in 10 stores in mid 2 this year. "From the customer side, we have got a new batch of customers, which is a good sign, but it is only an early sign. After all, they are only a tiny part of our product which can not affect the overall performance," Jean-Marc Duplaix said.

Jean-Marc Duplaix said that the performance of Bottega Veneta was worse than expected, but the limited series that had been released has achieved "considerable success". "It is expected that the turning point of growth will come from the second half of the year, but the trend will be more gentle."

Other brands (Other Houses)

Driven by the steady performance of Balenciaga, Alexander McQueen (Alexander McCune) and jewellery watches, sales of other brands in the first quarter were "strong growth", an increase of 25% to 577 million euros compared with the same period last year, excluding the impact of exchange rate fluctuations by 21.7%.

Sales of the high tech and leather goods sector increased sharply. Sales of all outlets in all regions had increased by two digits, mainly benefiting from the remarkable growth of the two brands of Balenciaga and Alexander McQueen. Wholesale channels continue to grow.

The sales volume of jewelry department has increased steadily, mainly benefiting from the success of Boucheron (Boucheron), Qeelin (Qi Lin) and Pomellato (Bowman Lando). The watch department is different. In January, the new model on the SIHH international advanced watch salon, Switzerland, was very popular.

Balenciaga is the fastest growing brand in the hi tech and leather goods sector, benefiting from clothing and footwear categories. "In the future, we will pay more attention to retail channels and open new stores, so we hope that Balenciaga will also have normal growth, but still maintain high growth. In terms of existing stores, we need to increase production efficiency and density.

Retail sales of Alexander McQueen brand grew strongly in two figures, mainly benefiting from the comparable sales growth in all regions and the sharp rise in online sales. In January, the brand opened a new concept store on Bond Street, which opened after renovation. The medium-term goal of the brand is to expand the store network to 128.

The restructured menswear brand Brioni (Bourriau Ni) closed 9 stores in the first quarter.

Corporate brand and other businesses

The first quarter strong performance, sales grew 26.5% to 137 million euros, excluding the impact of exchange rate fluctuations increased by 21.5%. The strong performance of Kering Eyewear has promoted the growth of the Department.

In the first quarter, the excellent performance of Gucci glasses and the successful launch of Balenciaga and Montblanc (MontBlanc) series promoted the sales of open glasses business, which could increase by 23% to 128 million euros.

After finishing its last non luxury brand Volcom, Kai Yun group is already a "pure luxury group". The group has also completed the upgrading of its official website in the near future. In the future, more acquisitions will be made to expand and improve the brand portfolio. (see "ornate ambition": Kai Yun group stripped its last non luxury brand: California outdoor sports brand Volcom was purchased by ABG, an American brand management company, and upgraded by the open cloud Group official website, emphasizing the location of "pure luxury group" based on the visual experience of pictures and videos.

Jean-Marc Duplaix points out: "we are very vigilant and are investigating the whole market." Starting from May this year, Art MIS of Kai Yun holding company will be free to sell its 29% stake in the German sports brand Puma (Puma). "We will seize opportunities at the right time." Author: Jiang Jingjin