Kering’s revenue tops $20 billion in 2021, boosted by Gucci’s growth
All of Kering’s brands experienced a “strong rebound in sales” in 2021, the French luxury goods group revealed on Thursday, noting that revenues were “well beyond 2019 levels”. In his Annual Report, Kering revealed that its sales increased by 35% and 13% compared to 2020 and 2019 to reach 17.6 billion euros ($20.01 billion). Meanwhile, the Francois-Henri Pinault-led group – which owns Gucci, Balenciaga, Bottega Veneta and Saint Laurent, among other brands – reported that current operating profit “increased sharply”, by 60% compared to 2020, to reach a new record. of 5.02 billion euros (5.71 billion dollars) and the current operating margin “returned to a high level” at 28.4%.
Looking at the group’s individual product categories, Leather Goods accounted for 50% of Kering’s revenue in 2021 (compared to 52% in 2020 and 55% in 2019), and was “probably one of the more exposed to fluctuations in tourism”, which is why it “posted weaker sales growth than other categories”. Kering specifies that its Leather Goods performance “must be analyzed in the light of the very high comparison base in 2019, as well as the houses’ careful inventory management in 2020, which led them to limit the number of product lines and the amount stocks. available in stores in 2020 and part of 2021.” Shoes follow with 21% of sales for 2021 (compared to 21% in 2020 and 18% in 2019), then ready-to-wear, which generates 15% of sales ( as in 2020 and up 1% compared to 2019).
The group’s sales came mainly from the Asia-Pacific region, which generated 39% of sales in 2021, followed by 27% from North America and Western Europe, which generated 22% of the turnover. business of Kering.
Looking at its three biggest brands, Kering said Gucci – which generates the bulk of Kering’s sales and is “as fresh as ever after 100 years” – had “a year of sustained growth”. The Italian brand’s fourth-quarter revenue alone rose 32%, a jump from analysts’ expectations of 18%. The increase in quarterly sales is due “to the success of its iconic lines, as well as an intense calendar of events and new product launches”, notably for Aria, the brand’s Balenciaga mashup collection. For the year, Gucci’s sales rose 31% to 9.73 billion euros ($11.07 billion). Gucci’s trading operating margin increased by 3.1 points to 38.2%.
An interesting note on the Aria collection, according to a memo from Bernstein on Thursday: sales of Aria products at Gucci stores are counted as revenue for Gucci and sales at Balenciaga stores as Balenciaga revenue. However, the majority of sales are made by Gucci due to its relative size and retail footprint.
In a nod to its continued efforts to overhaul its distribution and eliminate much of its wholesale efforts and focus on its own retail sales (91% of sales came from directly operated stores in 2021), sales of Gucci’s retail network in 2021 increased by 37%. and 10% from 2020 and 2019, respectively, and wholesale revenues were down 10% and 39% from 2020 and 2019. .)
Looking at Gucci’s sales by region, Kering said sales in 2021 rebounded “very strongly” in North America, up nearly 67% from 2020 and 2019. North represent 27% of sales, dominated by Asia-Pacific. with 44 percent. Growth in the Asia-Pacific region increased by 29.5% year-on-year, with regional growth mainly driven by mainland China, which saw strong increases in online and in-store sales.
In a corresponding earnings call on Thursday, Kering management said Gucci’s growth is expected to continue through 2022, which will see the brand continue to raise prices and increase its product mix, including through the bias of Aria-type drops in stores.
Kering announced that Saint Laurent generated 2.52 billion euros ($2.86 billion) in revenue for the year, up 45.6% and 26% at constant exchange rates compared to 2020 and 2019 respectively, driven by sales in North America (34%), Asia-Pacific (28%) and Western Europe (27%). Sales from directly operated stores were “strongly up” in 2021, up 55% from 2020 and 35% year-on-year, according to Kering, while wholesale revenue was 23% higher than in 2020 and 6% higher than 2019, as the brand “also began to streamline its third-party distribution.
For product breakdown, Saint Laurent sales are driven significantly by leather goods (an impressive 72%), followed by ready-to-wear (12%) and footwear (9%), and Kering noted that online sales proved to be an important sales driver, growing for the third consecutive year.
Saint Laurent is the subject of a lot of attention from the management of Kering, which said Thursday that it was the next house to join the realm of “mega-brands”, especially since its growth potential is “highly underestimated”, including in China. In short: the brand is on an “exceptional growth trajectory”.
Bottega Veneta’s 2021 revenue reached an “all-time high” of 1.5 billion euros ($1.71 billion), up 25% from 2020 and 32% from 2019, sales being driven by Asia, where its desirability has continued to increase (39%), Western Europe (24%), then North America (18%). According to Kering, “The trends that emerged in 2020 were confirmed in 2021: in Western Europe and North America – where local customers were the first to be won over by the House’s new creative direction – sales were very supported throughout the year. Bottega Veneta’s desirability also continued to rise in Asia. Kering particularly highlighted the brand’s success in North America, where sales increased by 83.3% compared to 2020 and 67% compared to 2019. that of the Group’s other brands.
With a category breakdown that somewhat mirrors that of Saint Laurent, Bottega generates 71% of its sales in its leather goods, followed by 18% in shoes and 9% in ready-to-wear.
Management focused here on the “confirmed potential” of Bottega as a key brand and, in this context, on plans to improve profitability. Kering said Bottega’s profitability “should continue to gradually improve.” Margins were 19.1% (up 4.9 points compared to 2020 and 0.7 points compared to 2019), an increase which was driven by “positive operating leverage, even if the house has invested heavily in 2021 to make its redesign a lasting success”.
Balenciaga had “another record year”, according to Kering. “In particular, the leather goods offerings of Balenciaga and Alexander McQueen have grown and attracted new customers. As a result, sales in this category have increased sharply. Ready-to-wear “also recorded rapid sales growth, mainly driven by men’s collections”, while “shoes again saw particularly strong growth in 2021, driven by the appeal of the Balenciaga and Alexander collections. McQueen”.
Reflecting on the year, Kering said that among other things, Balenciaga, which is “growing in distinction and prestige”, has “explored new business models and developed new modes of engagement”, the latest of which has included a influx of Kardashian and Marketing of Kanye West.