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Gucci's Meteoric Growth Is Slowing Ever So Slightly

Don't worry, it's still making Kering plenty of money.
A look from Gucci's Fall 2019 collection. Photo: Tullio M. Puglia/Getty Images for Gucci

A look from Gucci's Fall 2019 collection. Photo: Tullio M. Puglia/Getty Images for Gucci

Kering's announcement Tuesday that it would donate $100 million to Notre Dame reconstruction efforts was probably a good enough indication that the French luxury conglomerate is in a good financial position (even if rival LVMH subsequently promised to donate twice as much), but the release of its earnings for the first quarter of 2019 confirmed it. Revenue grew 21.9% on a reported basis, 17.5% on a comparable basis, to €3.785 billion ($4.277 billion at current exchange).

A per usual, Gucci saw the most growth of all of Kering's fashion brands, with sales up 20% on a comparable basis. In its press release, the company made sure to point out that this quarter is being compared against an especially high period of growth, and that the North American retail environment was challenging. That's because 20 percent is a bit low for Alessandro Michele's Gucci. In 2018, the brand topped €8 billion in sales with 36.9% growth. In most quarters since Michele's product hit stores, growth topped 35 percent.

This slight dip comes as no surprise. Analysts have been predicting a slowdown for Gucci for a while now, and Gucci has been proving them wrong until now. The brand's growth can't be meteoric forever, and perhaps it's starting to level out the same way Saint Laurent has post-Hedi Slimane. Saint Laurent is still doing totally fine, of course: This quarter, revenue at that brand was up 17.5%.

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Kering said Balenciaga and Alexander McQueen also had strong momentum. The disappointment of the group was Bottega Veneta, whose sales were down 8.9%. But, after a positive response to new designer Daniel Lee's debut collection in February, Kering feels confident things will turn around once his products hit stores in the fall.

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