Kering revenues up 4.1 percent in Q1

REPORT_ In the first quarter of 2014, Kering recorded 2.4 billion euros (Rs 20,166 crores) in revenue, up 4.1 percent

on a comparable group structure and exchange rate basis and up 1.2 percent over the first quarter of 2013 as reported. The luxury activities posted growth of 6.3 percent on a comparable basis, with directly operated stores turning in strong performances across all regions. Revenues from sport & lifestyle activities remained stable, down by 0.2 percent on a comparable basis.

Commenting on the development, François-Henri Pinault, Chairman and Chief Executive Officer, said, “The solid performance of our luxury activities, driven by continued sales growth in our directly operated stores, testifies to both the strength of our brands and the pertinence of our strategy, prioritizing brand elevation, in-store excellence and organic growth. In an environment that remains mixed, our sport & lifestyle activities are posting improving trends. We are confident that the group's energy and robust business model, combined with the extraordinary potential of our brands and the motivation of our team, will enable Kering to improve its operating performance in 2014 as a whole.”

In the first quarter of 2014, luxury activities posted revenue growth of 6 percent on a comparable basis, driven by excellent performances at directly operated stores across all brands (up 13 percent). In our directly operated stores, all key regions reported solid growth, both in mature markets (up 14 percent) and emerging markets (up 12 percent), with an excellent showing in Japan and positive trends in the Asia-Pacific region.

Pursuing its brand elevation strategy, Gucci posted first-quarter sales growth of 0.3 percent on a comparable basis, and healthy revenue growth of 6 percent in directly operated stores. In directly operated stores in Japan, where the brand has particularly strong market appeal, Gucci posted excellent growth, owing largely to the success of its brand elevation initiatives over the past several years. In the Asia-Pacific region, sales in directly operated stores were up 2 percent, with improving trends in Mainland China. Gucci's 3percent growth in directly operated stores in North America was partly impacted by tough weather conditions, while in Western Europe sales were hit by reduced tourist flows.

Leather goods continued their strong showing over the quarter, with particularly good growth in handbags in all regions, up 12 percent in directly operated stores. Bottega Veneta posted very solid growth in the first three months of 2014 with revenue jumping 15 percent on a comparable basis, driven by very strong performances in its directly operated stores, which was up 18 percent. While all regions contributed to this performance, sales were particularly brisk in the Asia-Pacific region went up 22 percent in Mainland China and Japan. All main product categories reported growth over the quarter, driven both by the performance of the brand's flagship products, Intrecciato, and by the market's enthusiastic reception of recent launched items aligned with Bottega Veneta’s DNA.

Saint Laurent turned in an outstanding first-quarter performance, reporting growth of 27 percent on a comparable basis, bolstered by sales growth of 72 percent in directly operated stores. This positive momentum bears witness to the successful roll-out of the brand's new store concept and the particular focus on this distribution channel.

All regions posted excellent results over the quarter. Leather goods registered this quarter another exceptional growth, driven by the Sac de Jour and Monogram handbags lines. Men's and women's ready-to-wear continued their upward trend driven by great reception of the spring summer 2014 collection.

In the first quarter of 2014, Kering's other Luxury brands grew by 8 percent on a comparable basis, driven by the British designer brands, with Stella McCartney and Alexander McQueen delivering noteworthy performances. Balenciaga continued to grow, with positive results in its directly operated stores. At Brioni, business was solid in directly operated stores, but was hit by a decline in tourism in Western Europe. In Jewelry and Watches, sales performance improved in the latter part of the quarter. Boucheron recorded good revenue growth in the first months of the year.

In the first quarter of 2014, while the Footwear market remained under pressure in Western Europe, revenue generated by the sport & lifestyle activities remained virtually stable at below 0.2 percent on a comparable basis. Puma posted encouraging results, with sales down just 0.4 percent on a comparable basis, both in directly operated stores and in wholesale. Performance was mixed across regions, with solid performances in Eastern Europe, the Middle East and, to a lesser extent, North America. Accessories and apparel were up over the quarter, largely offsetting slower sales in footwear. Business at Volcom picked up over the quarter, especially in directly operated stores in Europe. Electric posted positive revenue growth, mainly attributable to the launch of new product categories.