China Showing Positive Signs, Says Kering

RAPAPORT… Kering, the owner of Gucci, Saint Laurent and Boucheron, said demand in China was starting to recover, even as the effects of the coronavirus intensified in other locations.



“The group is observing encouraging signs in mainland China, where the decline in store traffic, and hence in sales, is narrowing,” the company reported Friday. “Conversely, the impact of the epidemic remains significant in other Asia-Pacific markets, and the situation has substantially deteriorated in recent weeks in western Europe and, more recently, North America.”



The luxury retailer’s share price rose 10% on Friday as investors appeared to welcome the news about China. The company has implemented a plan to adapt its cost base to mitigate the impact of the coronavirus, while enabling its brands to bounce back in the short and medium term, it added.



Still, global revenue will decline 13% to 14% year on year for the first quarter, Kering estimated. Comparable-store sales are expected to fall 15%. The outbreak will continue to affect sales in the second quarter, it noted.



“The epidemic does not call into question the structural drivers of the luxury industry,” the company continued. “The strength of Kering’s business model and organization, as well as its financial health and discipline, reinforce the group’s confidence in its medium- and long-term growth prospects.”



The company will release its first-quarter sales data on April 21.



Image: A Gucci store in Shanghai, China. (Shutterstock)