Outlook unclear as Covid-19 impacts sales, says Kering

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The French luxury group announced that second-quarter comparable sales plunged by 43.7% due to the Covid-19 pandemic, stressing it could not provide a forecast for the second half of the year, despite an encouraging recovery in Asia.

Kering said in a statement that it lacked enough visibility to forecast revenue trends or margins for the rest of the year. Chief Financial Officer Jean-Marc Duplaix told media the absence of tourist flows, which account for a large proportion of luxury sales, would weigh on the industry for some time yet. However, according to Duplaix, sales momentum had picked up in June in all regions as lockdowns eased, with the group’s brands doing particularly well in China – average sales growth there ranged from 40% to 70% since May.

Sales at Kering’s top brand Gucci in the April to June period declined by 45% on a like-for-like basis, which strips out the impact of currency swings and acquisitions. Yves Saint Laurent suffered an even bigger drop of 48%, while Bottega Veneta contained the drop in revenue to 24.4%. Just like it competitors, Kering had also temporarily closed shops and put manufacturing sites on stand-by as the virus spread from its crucial Chinese market to Europe and the United States. Online sales, however, bucked the trend and accounted for 18% of revenue in the second quarter, up from under 10% at the start of the year.

Reference:

Kering says outlook unclear as Covid-19 impacts sales – International Leather Maker. (n.d.). Retrieved July 31, 2020, from https://internationalleathermaker.com/news/fullstory.php/aid/8743/Kering_says_outlook_unclear_as_Covid-19_impacts_sales.html