Surprise delivered for the first time in over a year: Kering's Q3 revenue fell by 10% but the slowdown was better than expected, stock price surged 丨 Earnings report insights

Following the organic revenue increase of LVMH, another luxury giant has surprised with its financial report: Kering Group's quarterly sales performance has exceeded Wall Street expectations for the first time in a year. Although there is still a year-on-year decline, the performance of major brands has improved compared to the previous quarter.

On Wednesday, October 22, Kering Group, headquartered in France, announced that its revenue for the third quarter decreased by approximately 10% year-on-year to €3.42 billion, slightly above analysts' expectations of €3.31 billion, with the year-on-year decline narrowing from 18% in the second quarter and 16% in the first half of the year. After four consecutive quarters of worse-than-expected performance, Kering's quarterly revenue has finally outperformed analysts' expectations.

In the third quarter, Kering's same-store sales fell by 5%, only one-third of the 15% decline in the second quarter, and the downward trend was slower than the expected decline of 8.65% by analysts. Kering's financial report stated that the significant improvement in same-store sales compared to the previous quarter was partly due to favorable base comparisons.

Luca de Meo, Kering's newly appointed CEO, pointed out that there was a noticeable improvement in performance in the third quarter compared to the second quarter. Nevertheless, the group's performance "is still far below" the market average, and "we are working tirelessly to turn the situation around."

After the financial report was released, Kering's U.S. stock, which had fallen by 2.3% in early trading, surged, and by the end of the early session, the intraday increase expanded to about 4% within just five minutes, rising over 6% at the beginning of the afternoon session.

Gucci's Same-Store Sales Decline Slightly Below Expectations in Q3

The financial report shows that in the third quarter, Kering's flagship brand Gucci contributed nearly 40% of the group's revenue, with the same-store sales decline narrowing by more than 40% compared to the second quarter, and the decline was slightly below analysts' expectations. Yves Saint Laurent's same-store sales decline narrowed by more than half compared to the previous quarter, while Bottega Veneta's same-store sales accelerated growth.

In the context of weak market demand, Gucci replaced its creative director for the second time in about two years in March, appointing Demna Gvasalia, who led the design at Balenciaga. Kering's Chief Financial Officer (CFO) Armelle Poulou stated after the third-quarter report that she was "very satisfied" with Demna's presentation in Milan last month. She noted that although Gucci decided to limit the sale of his collection to only 10 stores globally, the foot traffic in the boutiques selling these new products has increased.

The performance of Kering's three major brands is as follows:

Gucci: Q3 revenue of €1.342 billion, a year-on-year decline of 18%, same-store sales down 14%, with analysts expecting a decline of 15%. Q2 revenue decreased by 27% year-on-year, and same-store sales fell by 25%.

Yves Saint Laurent: Q3 revenue of €620 million, a year-on-year decline of 7%, same-store sales down 4%, with Q2 revenue decreasing by 13% year-on-year and same-store sales down 10%.

Bottega Veneta: Q3 revenue of €393 million, a year-on-year decline of 1%, same-store sales increased by 3%, with Q2 revenue decreasing by 1% year-on-year and same-store sales increasing by 1% Risk Warning and Disclaimer

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