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Today's Luxury Environment Proves Tough on Gucci, Too

Backstage at Gucci's fall 2015 show. Photo: Ewan McLuada/Getty Images
Backstage at Gucci's fall 2015 show. Photo: Ewan McLuada/Getty Images

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Earlier this month, LVMH reported that its fashion business grew not at all during the first few months of 2016 — a warning sign that the luxury market as a whole would be having a tough go of it this year. Sure enough, Burberry lowered its own estimates for the year's earnings a few days later.

Kering released its first quarter results on Thursday, and while growth remained positive, revenue was slightly lower than expected.

Sales from the conglomerate's luxury brands grew 2.6% to 1.8 billion in revenue, though results varied quite a lot between its brands. Kering's Gucci, which accounted for €894 million of that, lost a bit of the momentum it had going at the tail end of last year — sales were up only 3.1 percent during the first quarter, compared to 4.8 percent in the fourth quarter of 2015. Bottega Veneta truly clunked along, with sales down 8.3 percent.

Kering pointed to the strength of the US dollar and low tourism to Europe in the wake of the Paris terrorist attacks in November as two reasons for these poor performances.

Still, Saint Laurent — Kering's star player since Hedi Slimane took over its creative direction for spring 2013 — managed to carry on its explosive growth, with same-store sales growing 26.5 percent in the quarter to 269 million. (What everyone's wondering, especially in the face of a tricky luxury environment: will Anthony Vaccarello, who was named creative director of the brand after Slimane stepped down this month, create the same retail magic?) Even in a difficult external environment, it's hard to keep a (really) good thing down.