PARIS Gucci is seeing a sharp slowdown in the U.S. — but the blackface controversy apparently isn’t to blame.

While Chinese consumers continued to snap up the brand’s $1,900 logo sweatshirts and $730 leather horsebit loafers in the first quarter, U.S. shoppers cooled on the brand, contributing to a marked flattening in its growth rate after years of stratospheric increases.

While parent company Kering said the “normalization” of its star brand’s sales trajectory was expected, a combination of factors weighed on its performance in North America. The group’s luxury division registered growth of just 7 percent in the region, which was its fastest-growing market this time last year.

Gucci’s performance was even less impressive: Retail sales in North America were up 5 percent in the first three months of the year, compared with 35 percent in the Asia Pacific region as a whole, which saw double-digit increases in all countries.

Jean-Marc Duplaix, chief financial officer of Kering, blamed a high comparison base, a drop in tourism, waning consumer confidence and late deliveries of some styles — though he insisted that the scandal over a balaclava-style sweater that critics said evoked blackface was not to blame for the U.S. slowdown.

“This is a combination of factors and there is nothing alarming so far, and we remain confident for the remainder of the year in North America,” he told a conference call on Wednesday evening, after the group reported a 21.9 percent rise in first-quarter revenues, slightly above market expectations.

“We are working clearly on the assortment and the merchandising in order to better address the U.S. market, but there is no specific concern so far,” Duplaix added.

Celebrities including rapper T.I. called for a boycott of the brand after the faux pas was called out on Twitter in February, prompting Gucci to apologize and launch initiatives to foster cultural diversity and awareness.

“We believe that Gucci, and more globally the group, has managed the situation in the best way possible. We have some more initiatives to come in order to place diversity and inclusivity at the core of our key decisions and I think that obviously, we should not consider the performance in the U.S. because of that event,” said Duplaix. “I don’t believe that it had, at the end of the day, a very material impact.”

Gucci registered organic growth of 20 percent in the first quarter, down from 28.1 percent in the fourth quarter of 2018 and from 48.7 percent during the same period a year ago. “There is no surprise on our side and the pace of normalization is quite consistent with what we were foreseeing,” said Duplaix.

Sales at Gucci topped 8 billion euros in 2018, cementing its status as one of the world’s biggest luxury brands, hot on the tail of Louis Vuitton and Chanel. The brand accounted for more than 60 percent of Kering’s revenues, and 83 percent of its operating profit, last year.

Commenting on the full-year results, Kering chairman and chief executive officer François-Henri Pinault in February confirmed the group’s medium-term forecast for Gucci to grow twice as fast as the luxury market as a whole, pointing to the strong potential of underdeveloped categories like fragrance and cosmetics.

Sales of personal luxury goods are expected to grow around 5 percent in 2019, according to management consulting firm Bain & Co., meaning Gucci’s growth should eventually descend to around 10 percent.

The deceleration is already being felt in ready-to-wear and shoes, while handbags and small leather goods are booming, Duplaix reported.

“For these categories, we are in this phase of our normalization, but very confident with the pipeline of products we have,” he said. “The Gucci teams are working in order to continue to fuel the offer with newness, but also work on the carryover lines or the pillars.”

Growth in Mainland China was particularly dynamic as Chinese shoppers spent more at home, encouraged by government measures including reduced import tariffs. Duplaix expects the Chinese cluster to account for 35 percent of Gucci’s sales this year. “The desirability of the brand in China is super high,” he noted.

Gucci opened just four stores in the first quarter, meaning it will continue to focus on boosting store productivity as it progressively converts boutiques to the retail concept introduced by creative director Alessandro Michele when he took over the brand in 2015.

“Gucci continues to execute its strategic plan and gain market share. The brand trajectory aims at delivering consistent and sustainable growth, with a deliberate focus on improving all retail metrics across regions, first and foremost conversion rates,” said Duplaix.

Having formally completed its transformation into a pure luxury player with the sale of action sports brand Volcom this month, Kering is on the hunt for acquisitions to flesh out its luxury portfolio.

“We are vigilant, we are scouting the market,” said Duplaix, noting that the Pinault family’s private investment arm Artémis is free to sell its remaining 29 percent stake in German sportswear company Puma from May. “We will seize an opportunity in due time.”

In a statement, Pinault said the group continued to outperform sector peers in the first quarter.

“On top of very strong increases in the first quarter of last year, Gucci, Saint Laurent and our other houses all posted excellent revenue growth, fueled by the creativity of their offers and the innovativeness of their execution. As Bottega Veneta implements a fundamental reset, early indicators are highly encouraging,” he said.

“The agility we have put at the heart of our organization positions us well to continue achieving steady, sustainable and profitable growth,” Pinault added.

Saint Laurent posted a 17.5 percent rise in organic sales, while other houses, a division that includes Balenciaga and Alexander McQueen, saw sales increase 21.7 percent. However, Bottega Veneta recorded a decline of 8.9 percent as it prepares for the first clothing designs by creative director Daniel Lee to hit stores.

Duplaix said Bottega Veneta’s performance was worse than expected, and he expected only a modest improvement in the second half, despite “encouraging” feedback and order books following Lee’s first show in Milan in February.

He noted, however, that Lee’s first two handbag designs, the Maxi Cabat and the Pouch, have sold out since they went on sale in around 10 stores worldwide beginning in mid-February.

“We saw that in terms of clientele, we had a new profile of client,” said Duplaix. “It’s a good indication, but it’s just an early indication and, of course, it has not really moved the needle in terms of performance, because it was really a minor part of the assortment.”

Saint Laurent, on the other hand, recorded an “outstanding” performance in leather goods. “New lines are extremely well received, while carryovers continue to enjoy broad success,” Duplaix reported.

Balenciaga and McQueen both delivered “excellent” performances. Balenciaga was the fastest-growing brand in the couture and leather goods division, boosted by rtw and shoes.

“The priority will be given to retail going forward, with some new openings, so going forward we expect a normalization of the growth also at Balenciaga, but still at a very high level of growth,” Duplaix said. “Clearly there is a need, in the existing stores, to boost even more the productivity and the density.”

McQueen’s retail sales were up in the strong double-digits, supported by like-for-like growth in all regions and another sharp increase in online sales, he added. The brand inaugurated a new store concept on Bond Street in London in January, and plans to double its store network to 128 units in the medium-term.

Men’s wear brand Brioni, meanwhile, closed nine locations during the quarter as it continues to restructure.

Kering’s results come after LVMH Moët Hennessy Louis Vuitton, the world’s largest luxury group, reported last week that overall revenues were up 16 percent in the first quarter to 12.54 billion euros, helped by a stronger-than-expected performance in its key fashion and leather goods division.

Hermès is scheduled to publish its first-quarter sales on April 25.

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