Gucci Q4 sales lift Kering & defy China fears

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Kering animal welfare
// Kering’s Italian powerhouse Gucci has managed to surpass its rivals in terms of sales
// Kering has been under scrutiny due to questionable demand among Chinese shoppers

Kering has joined its competitors in sustaining demand in China, as its Italian label Gucci’s drive slowed down in the fourth quarter but sales managed to surpass other luxury retailers.

Luxury goods group Kering, which is also the parent company of Saint Laurent and Balenciaga, has been under surveillance due to the questionable demand among shoppers in China and whether they can hold up, as they currently account for over a third of industry sales.

The company’s like-for-like sales rose by 24.2 per cent, exceeding expectations in the October to December period, when excluding currency swings and acquisitions, and were up 24.5 per cent on a reported basis to €3.8 billion (£3.32 billion).

“Sales among our Chinese clientele remained very dynamic in the fourth quarter, even with a high comparative base,” Kering financial director Jean-Marc Duplaix said.

Gucci’s like-for-like sales had a growth of 28.1 per cent in the fourth quarter, which marks a slowdown from the previous three months, yet exceeding its competitors as margins reached 39.5 per cent in 2018.

Gucci’s figures – with annual sales of €8.3 billion (£7.27 billion) puts it on the same level as Chanel, which is owned by LVMH’s Louis Vuitton.

It accounted for over 80 per cent of the group’s operating income last year.

Gucci has recently stolen news headlines after news broke out that it was under scrutiny over a tax scandal in Italy, where Kering faces a potential €1.4 billion (£1.22 billion) bill for allegedly avoiding tax on earnings generated by the fashion house and billed to a Swiss subsidiary.

Kering is debating on the basis of the claim and the amount.

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