Kering’s Q1 Jewelry Sales Were ‘Exceptional’

Paris—Kering had a stellar start to its fiscal year, reporting double-digit revenue growth for all of its luxury brands.

Here are five important takeaways from the company’s most recent earnings report.

It was a strong first quarter for Kering.

Kering posted revenue of €4.96 billion ($5.37 billion), a 27 percent increase year-over-year on a comparable basis.

The luxury conglomerate owns a slew of high-end brands, including Gucci and Yves Saint Laurent, as well as jewelry brands like Boucheron and Pomellato.

All of its brands posted double-digit year-over-year revenue growth.

Revenue from its directly operated stores was up 23 percent year-over-year and up 32 percent compared with the same period in 2019.

Online sales continued to grow during the quarter, said Kering, accounting for 15 percent of total direct sales.

“While we remain attentive to economic and geopolitical conditions, we invest in all our brands, whose attractivity will continue to fuel our growth and profitability,” said CEO François-Henri Pinault in a press release.

Kering did not provide fiscal guidance for the year ahead.

Jewelry had an “exceptional” year.

The company’s jewelry brands fall into its “other houses” division, alongside Alexander McQueen and Balenciaga.

Its jewelry portfolio includes Boucheron, Pomellato, DoDo, and Qeelin.

First-quarter revenue in the “others” division totaled €973.4 million ($1.05 billion), a 35 percent increase on a comparable basis.

In this division, retail sales were up 45 percent while wholesale revenue was up 22 percent.

“In jewelry, our houses posted outstanding performances,” said Chief Financial Officer Jean-Marc Duplaix during the company’s earnings call Thursday.

Boucheron’s sales “grew sharply in key Asian markets,” he said, and the brand also did well in Japan and Europe.

The brand’s latest high jewelry collection, “New Maharajahs,” was released earlier this year.

“Pomellato’s permanent best-sellers led the growth, and its high jewelry was extremely well-received,” said Duplaix.

“Qeelin’s sales were again very dynamic. The success of Chinese New Year mitigated recent headwinds.”

China’s COVID-19 restrictions pose a problem for Kering.

China has been tightening its restrictions to protect its citizens from a rise in COVID-19 cases.

The Asia-Pacific region accounts for the largest portion of its revenue at 37 percent, with North America right behind at 26 percent.

“We opened 2022 on a very solid first quarter in a more uncertain environment, notably impacted by tightening COVID restrictions in China since March,” said Pinault in a press release.

Gucci, a consistent bright spot on Kering’s balance sheet, had its strong growth in North America and Europe “overshadowed by its exposure to China,” said Kering, adding that it is working to “fully capture the vitality of the market.”

For North America, as well as Western Europe and Japan, overall sales growth for the company was strong, said Kering.

Watches move out as eyewear moves in.

Kering’s former watch brands, Girard-Perregaux and Ulysse Nardin, were notably missing from the “other houses” division this quarter.

Kering sold its entire stake in Sowind Group, which owns the Swiss watch manufacturers, to its current management in January.

The luxury company has been building its eyewear portfolio, growing to 16 brands, including glasses from its fashion houses as well as jewelry brands Cartier, Boucheron, and Pomellato.

Last month, Kering inked an agreement to acquire Maui Jim, a Hawaii-based sunglasses brand. The transaction is expected to close in the second half of 2022.

In July 2021, Kering Eyewear acquired Danish luxury brand Lindberg.

Kering also partnered with Richemont in March 2017 to manufacture and distribute eyewear from Cartier and other brands, making Richemont a shareholder of Kering Eyewear.

There may be new faces on Kering’s board.

At a March 4 meeting, Kering’s board of directors, alongside its Appointments and Governance Committee, affirmed some changes to the board while putting others up for a vote.

Sophie L’Hélias, an expert on Environmental, Social, and Governance (ESG) issues, resigned, which the board confirmed. Marketing expert Yseulys Costes’ term of office was not renewed.

Daniela Riccardi, CEO of French luxury brand Baccarat and an independent director on Kering’s board, will have her term of office renewal put up for a vote at the board’s annual general meeting on April 28.

Véronique Weill, Yonca Dervisoglu, and Serge Weinberg were appointed as independent directors, but will need the board’s vote of approval at the meeting later this month.