Luxury fashion conglomerate Kering S.A.(Gucci, Balenciaga, Bottega Veneta, and Saint Laurent) has revealed its financial report for Q1 of 2020. Similar to the Q1 report from rival LVMH, the Covid-19 crisis has shaken revenue streams with a reported Group-wide decline of 15.4 percent.
Gucci, one of Kering's most profitable brands, has seen sales drop by 22 percent worldwide compared to Q1 of 2019. This has been attributed to the closure of physical stores and a suspension on travel which has interrupted the essential profits procured from the lucrative Chinese market. This slump has been partially countered by a boost in online sales, which now counts for 9.5 percent of Gucci’s retail.
Kering's chief financial officer Jean-Marc Duplaix commented that “exclusivity will be ever more paramount than before,” as Gucci plans to make further cutbacks from wholesale.
In contrast, one of Kering's less established brands Bottega Veneta actually saw growth with a 10.3 percent year-over-year increase for Q1, which was put down to a 55 percent year-over-year growth from wholesale.
Bottega Veneta was recently taken over by Daniel Lee (formerly of Phoebe Philo's Celine) who has repositioned the brand as a key player in the new era of luxury fashion with its focus on Italian craftsmanship, biodegradable materials, and low-key branding.
While these statistics look promising, it should be noted that Bottega Veneta's track record for Q1 of 2019 was comparatively low.
Duplaix also commented that dramatic discounts and mark-downs are to be expected to shift the excess inventory for the Spring/Summer 2020 collections as products begin to pile up in warehouses and shuttered stores. He concluded, "we know we will face a very difficult second quarter and a challenging year overall, but I can assure you that we are not only adapting to these unexpected circumstances, we are also using these lessons to improve our efficiency, resilience, and agility to emerge better prepared for the future."