Kering sales bolstered by marketing at Puma as Gucci drops

Kering SA Chief Executive Officer Francois-Henri Pinault

Kering SA reported third-quarter revenue that met analysts’ estimates as growth for Puma sports gear offset the effects of weaker Chinese spending on sales of Gucci handbags.
Revenue climbed 3.3 percent to 2.6 billion euros (USD3.29 billion), Paris-based Kering said Friday in a statement after European markets closed. Analysts predicted 2.59 billion euros, according to the median of 17 estimates compiled by Bloomberg. Sales climbed 4.4 percent on a comparable basis.
“Luxury activities held firm in a complex economic environment, thanks to a strong sales uptrend in our network of directly operated stores,” Chief Executive Officer Francois-Henri Pinault said in the statement, adding that sport and lifestyle products were boosted by marketing at Puma.
Kering, which this week named new CEOs at the Bottega Veneta, Brioni and Christopher Kane brands, said in July operating performance would improve in the second half of 2014 and forecast a return to positive revenue trends, including at Gucci. Luxury-goods makers including LVMH Moet Hennessy Louis Vuitton SA however have recently reported softer demand.
Fewer Chinese tourists are shopping in Hong Kong because of pro-democracy protests, while fighting in Ukraine and the resulting sanctions have depressed Russian spending in Europe. Worldwide sales of personal luxury goods will rise 2 percent this year, the slowest pace since 2009, Bain & Co. estimated this month.
Gucci sales fell 1.9 percent on a comparable basis, compared with the 0.5 percent drop anticipated by analysts.
“Given recent market headwinds, it’s in line with the overall industry performance,” Chief Financial Officer Jean-Marc Duplaix said on a conference call. “In the U.S., Gucci’s momentum is vibrant. On the flip side, we’ve experienced deterioration in Hong Kong and Macau, while Singapore remained a difficult market.”
Gucci sales in China saw a stabilization, though “still slightly negative in the low-single digits,” Group Managing Director Jean-Francois Palus said, adding Kering doesn’t predict further deterioration.
Revenue at Puma, which is trying to reposition itself as a sports-performance brand, rose 6.2 percent, compared with a 3 percent gain predicted by analysts. Andrew Roberts and Corinne Gretler, Bloomberg