Boucheron, Pomellato Struggle in Kering’s H1

The jewelry brands’ limited exposure to the recovering Asia-Pacific market dulled their performance in the first half of the year.

Lenore Fedow lenore.fedow@nationaljeweler.com

A Mineralismo bracelet featuring rhodonite with black diamond and pink sapphire accents in rose gold from Kering-owned Pomellato’s first high jewelry collection. The division housing Kering’s watch and jewelry brands posted a 26 percent drop year-over-year in first-half revenue.

Paris—Luxury conglomerate Kering said the first half of its fiscal year has been the toughest period it’s faced, with sales sinking double digits across all markets.

The company behind Gucci, Yves Saint Laurent and other high-end brands struggled as the COVID-19 pandemic kept many of its stores shuttered for months on end and halted tourism.

“Our results today underscore the extent of the disruption exacted by the pandemic on our operations,” CEO François-Henri Pinault said in a press release announcing the results, adding he is confident in the company’s ability to weather the crisis.

First-half revenue totaled €5.38 billion ($6.31 billion), a 30 percent decline compared with €7.64 billion ($8.96 billion) a year ago.

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In just the second quarter, revenue fell 44 percent on a comparable basis to €2.18 billion ($2.55 billion).

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

First-half revenue in the “others” division totaled €919.1 million ($1.08 billion), a 26 percent drop on a comparable basis.

Revenue in this division sank 44 percent in the second quarter. Retail sales were down 35 percent year-over-year while wholesale, affected in particular by watches, fell 53 percent.

Jewelry brand Qeelin, bolstered by a recovering market in mainland China, saw revenue growth in the first half of the year.

Kering recently invested in the brand, notable for its Chinese symbolism inspiration, to expand its presence in mainland China, leading to strong performances in recent quarters.

Boucheron and Pomellato continued to be hurt by their “limited exposure” to the recovering Asia-Pacific market, noted Chief Financial Officer Jean-Marc Duplaix on an earnings call Tuesday.

The temporary closures across Kering’s retail network had a major impact on the second quarter with 65 percent of its stores closed in April and 45 percent in May. As of June, 15 percent of stores remain closed.

While nearly all stores in Europe and Japan have reopened, 50 percent of its U.S. stores are still closed.

Kering’s luxury houses saw a decline in comparable growth across all regions, including a 34 percent drop in North America, 25 percent in Asia-Pacific, 29 percent in Western Europe and 40 percent in Japan.

Its overall retail sales in the first half were down 31 percent, though Kering noted a higher store conversion rate was easing the sting of softer traffic.

As for wholesale, U.S. department

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stores and other wholesale accounts are being cautious about their orders, Kering said.

The loss of travel retail also took its toll as wholesale revenue fell 27 percent year-over-year.

The company said its long-term strategy is to get a tighter grip on its distribution, downsizing the number of wholesalers.

Online sales were a bright spot for the luxury conglomerate, jumping 72 percent in the second quarter and 47 percent in the first six months overall.

E-commerce revenue accounted for 13 percent of all sales, more than double the 6 percent reported last year.

Shoppers in North America warmed up to online shopping, sending e-commerce sales in the region up 46 percent in the first half of the year.

Online sales accounted for 26 percent of retail sales in the U.S., double the 13 percent reported a year ago.

Kering did not provide financial guidance for the year ahead, noting: “The lack of visibility about how the worldwide personal luxury goods market will evolve in the next few months makes it impossible to forecast the group’s second-half sales with any sufficient degree of reliability.”

Lenore Fedowis the associate editor, news at National Jeweler, covering the retail beat and the business side of jewelry.

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