Gucci posts solid growth despite Hong Kong turmoil

Gucci posts solid growth despite Hong Kong turmoil
FILE PHOTO: A view shows the new high end jewellery Gucci store on Place Vendome in Paris, France, July 2, 2019. REUTERS/Regis Duvignau -
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PARIS (Reuters) – Revenue growth at Kering SA’s <PRTP.PA> Gucci brand slowed further in the third quarter, though the label managed to offset some of the turmoil in Hong Kong through business in other Asian markets and its sales beat expectations.

Gucci drives the bulk of profit at Paris-based Kering, and investors are keeping a close watch on momentum at the Italian fashion label after several years of booming earnings under designer Alessandro Michele.

Sales at the brand, up 10.7% on a comparable basis in the July to September period, are progressively slowing from the breakneck pace of the past two years.

But they came in a touch above some analyst forecasts, in spite of weak spots including in the United States where it is struggling to reverse a contraction.

The brand made up for problems in Hong Kong, where luxury brands had to temporarily close stores during pro-democracy protests, better than other Kering labels like Saint Laurent thanks to its large store network in mainland China for instance, the group’s financial chief, Jean-Marc Duplaix, said.

“The slide in Hong Kong varies from one brand to another,” Duplaix told reporters, without breaking out numbers.

Luxury goods rivals, such as Hermes <HRMS.PA> and LVMH’s <LVMH.PA> Louis Vuitton, have also reported strong trends across the rest of Asia, which absorbed some of the hit from Hong Kong.

Spending from Chinese clients also shifted to Singapore, Macau and South Korea, Duplaix said.

The group as a whole reported a 14.2% revenue increase in the third quarter to 3.88 billion euros (£3.35 billion).

That marked an 11.6% increase on a comparable basis, roughly in line with analyst forecasts for a slowdown from the 13.2% growth notched up a quarter earlier.

(Reporting by Sarah White in Paris; Editing by Matthew Lewis)

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