There’s a reason Kering tops our China Global Luxury Index. After a financially disappointing 2020, the French luxury group has now bounced back above pre-pandemic levels.
On April 20, the umbrella company of Gucci and Bottega Veneta reported that group revenue surged 26 percent to 3.89 billion euros in the first quarter of 2021, up 5.5 percent compared with the same period in 2019. This was fueled by a sales increase of 83 percent and 46 percent in the Asia Pacific region and the US, respectively, as well as a sharp rise in e-commerce — now accounting for 14 percent of total sales.
While Gucci was a stain on Kering’s scorecard in 2020, the brand managed to reclaim its star status this quarter. The leather goods giant, which accounts for 60 percent of its parent’s revenue, saw comparable revenues increase 24.6 percent, beating analyst expectations.
According to Kering’s Chief Financial Officer Jean-Marc Duplaix, Gucci’s rebound was largely driven by creative capsules, retail experiences, and initiatives tailored to high-end clients. In particular, the North Face and Doraemon partnerships received shout outs, pointing to the success of the brand’s “always on” strategy, which aims to drum up momentum through events and product drops.
With mainland China offering triple-digital growth for the company, Chinese New Year proved a crucial shopping holiday across different houses. In addition to Gucci’s tie-up with the Japanese anime icon, stablemates Balenciaga and Qeelin also capitalized on ox-related cuteness via special collections. Although met with mixed success — some netizens called the Doraemon crossover “lazy” marketing while others criticized Balenciaga’s limited-edition items as “insulting of Chinese culture” — these activities ultimately helped solidify Kering’s hold on the market.
Meanwhile, Bottega Veneta had the highest Q1 in its history, with revenue rising 25 percent year-on-year. Following its headline-making disappearance from social media in January and launch of its own digital magazine in late March, Bottega is expected to receive an e-commerce boost thanks to migration to internal platforms, said Duplaix.
Given this strong start to the year, Kering is optimistic about the days ahead. “While we’re not out of the woods, we are confident in our houses’ ability to succeed in 2021 and beyond,” Duplaix told reporters.
And between Gucci’s upcoming Balenciaga collaboration and other projects planned for its centennial anniversary, it seems like the birthday brand will remain key to Kering’s growth. Already, it’s proven to be the king of capturing Chinese consumers — now it’s a matter of keeping them excited that will steer future results.