Saint Laurent RTW Spring 2015

Overall, luxury revenues rose 3.5 percent in the third quarter to 1.68 billion euros, or $2.22 billion, with mature markets progressing at 7 percent.

PARIS — Hedi Slimane is rocking in Mainland China.

This story first appeared in the October 24, 2014 issue of WWD. Subscribe Today.

Sales of his collections for Saint Laurent more than doubled there in the third quarter — defying a broader slowdown in the region — and the French house logged double-digit gains in all other geographies.

Saint Laurent revenues vaulted 27.6 percent to 177.8 million euros, or $235.9 million, helping parent Kering to report an increase in sales amid a challenging and volatile environment for retail and luxury goods. This was evident by a decline in revenues at Kering’s core brand, Gucci, which is trying to reverse the slide in China and elsewhere by reinventing itself with fewer logo products.


Investors frowned on the results, sending shares of Kering down 4 percent in early trading Friday on the Paris Bourse.

A marked improvement at Puma, the core brand of Kering’s nascent sport and lifestyle division that has been underperforming for the last few years against the likes of Nike and Adidas, also helped lift group revenues by 3.3 percent to 2.61 billion euros, or $3.46 billion, in the three months ended Sept. 30. Stripping out the impact of currency and acquisitions, the increase stood at 4.4 percent — versus 4 percent in the second quarter and 4.1 percent in the first three months of the year.

Crediting its Forever Faster campaign and a shift in emphasis towards performance products, Puma sales improved 2.8 percent to 847.8 million euros, or $1.12 billion, rebounding in Germany and France.

Jean-Marc Duplaix, Kering’s chief financial officer, cited a “sharp surge in brand awareness” and told a conference call “the Puma brand is on the offensive.”

He noted that its footwear sales, which account for 44 percent of the total, were back in positive territory, up 2 percent.

The continued weakness at Gucci, which saw sales in the three months slip 1.6 percent to 851 million euros, or $1.13 billion, dominated the conference call, although Kering insisted that positive trends in directly operated stores in North America and Japan — up 8 percent and 4 percent, respectively — underline the success of Gucci’s “brand elevation” strategy, which uses more leather products.

Duplaix cited “solid trends” in handbags, which represent 32 percent of retail sales, fanned by the new Swing and Bright Diamante lines, with the Jackie Soft also showing promise. He also touted double-digit growth for creative director Frida Giannini’s fall ready-to-wear and noted men’s and women’s shoes “grew nicely.” Small leather goods and luggage were in negative territory, he noted.

Gucci sales in Asia Pacific declined 5 percent, reflecting the disruption of pro-democracy demonstrations in Hong Kong and Macau, where the environment “further deteriorated, leading to double-digit declines there,” Duplaix said.

Mirenda Yeung, previously general manager of Gucci in Taiwan, is to become president of Gucci in Greater China, effective in January. She succeeds Carol Shen, an Estée Lauder veteran who had joined the Italian brand in mid-2012.

Before Gucci, Yeung had worked for Chanel in Singapore and Louis Vuitton in Tawian, Hong Kong and Vancouver.

In addition, Gucci said Thierry Pichon, its Hong Kong general manager, would also assume the responsibility for Gucci operations in Macau. Pichon joined Gucci from Louis Vuitton last February.

Gucci noted its new structure for the Asia-Pacific region, excluding Japan, would allow headquarters to work more directly with the respective markets and ensure the “effective implementation” of its strategy.

During the call, Duplaix characterized Gucci’s business as stable in Mainland China, “difficult” in Singapore while South Korea and Taiwan were fizzy.

The latter Asian countries were also the bright spots in Asia Pacific for Bottega Veneta, which posted a 10.4 percent revenue gain in the quarter to 286.2 million euros, or $379.7 million. Men’s was Bottega’s fastest growing category, and already accounts for more than a third of the business, Duplaix noted.

Dollar figures are converted from euros at average exchange rates for the period to which they refer.

Saint Laurent logged double-digit gains across retail and wholesale channels, with leather goods up 35 percent in direct retail, lead by its Sac du Jour and Monogram lines, with women’s apparel increasing 49 percent to account for a quarter of all retail sales and men’s wear improving 17 percent.

By region, Saint Laurent sales rose 21 percent in Japan, 26 percent in Western Europe, 35 percent in Asia-Pacific, 47 percent in North America and 74 percent in other countries.

In a research note, HSBC analyst Antoine Belge noted the “positive surprise at Puma was offset by a disappointment at ‘other brands,’” which posted a 1.8 percent gain in sales to 361.6 million euros, or $479.7 million.

That reflects a drop in revenues at Boucheron and watch brand Girard-Perregaux, while soft luxury brands in the group progressed, with double-digit gains at Balenciaga and “strong growth” at Stella McCartney, Alexander McQueen and Christopher Kane, Kering said. Trends at Pomellato, acquired in 2013, were described as flattish.

Francois-Henri Pinault, Kering’s chairman and chief executive officer, said that, “luxury activities held firm in a complex economic environment.”

Indeed, Duplaix noted that Russian tourist spending continues to weaken, the Japanese are traveling less and flows of Chinese tourists to Europe dipped in the second and third quarters. In a climate of “sharp market volatility, it’s very hard to predict consumer mood,” he stressed.

On the plus side, he noted currency headwinds are progressively easing.

Overall, luxury revenues rose 3.5 percent at Kering to 1.68 billion euros, or $2.22 billion, with mature markets progressing at 7 percent, outpacing emerging ones, up 4 percent.

Ebbing consumption and near constant political flare-ups worldwide have been wreaking havoc on Europe’s main luxury players, with Burberry recently warning of a “more difficult external environment” ahead; Mulberry was blindsided by a slowdown in tourist traffic in London and a decline in wholesale sales worldwide, and Kering’s French rival LVMH Moët Hennessy Louis Vuitton flagging “an uncertain economic and financial environment” as it reported a 5.7 percent gain in third-quarter sales.

Compagnie Financière Richemont is scheduled to give a trading update Nov. 7.

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