French luxury group Kering, owner of Gucci and Saint Laurent, shrugged off fears about waning demand from the key Chinese market as it beat expectations for fourth quarter sales to end a “remarkable” year.
Organic sales role 23.3 per cent in the fourth quarter to €3.72bn, against a high base of comparison and ahead of the 22 per cent fourth quarter sales growth forecast by a Bloomberg survey of analysts. Overall during the year sales surged 29.4 per cent to €13.7bn.
“It was a remarkable year,” said Jean-Marc Duplaix, chief financial officer of Kering, on a call with journalists. “The fourth quarter remained extremely dynamic with Chinese customers,” he said, pointing to a continued repatriation of spending to mainland China that began around the end of 2017.
Geographically growth last year was led by North America, which was up 37.8 per cent, and Asia-Pacific, which gained 33.8 per cent.
Kering joins luxury rivals LVMH and Hermès, as well as consumer group L’Oréal, in reporting continued strong demand from China for its high-end product despite macroeconomic concerns. Although China’s economy grew at the slowest pace since 1990 last year, hurting companies like Apple and Caterpillar, the luxury segment of the market hasn’t yet experienced such a slowdown in spending.
Kering’s largest brand Gucci, which is now over two years into a successful turnaround, continued to power ahead. Sales gained 28.1 per cent in the fourth quarter, pushing sales for the full year up 36.9 per cent and over the €8bn mark.