Kering’s revenue growth points to its ability to adapt to a changing luxury industry.

What happened

  • Kering, the luxury conglomerate that owns Yves Saint Laurent and Gucci, among other companies, saw its Q1 2018 revenue increase 36.8%—Gucci’s revenue alone rose 48.7%. In the same quarter, Gucci’s online sales more than doubled.

Why it matters

  • Kering’s continued growth is indebted to Gucci, which has reversed course since 2015, thanks in large part to its improved relationship with a younger customer base. In the first three quarters of 2017, 55% of Gucci’s sales went to shoppers under 35 years old. Much of this shift is attributed to Gucci’s new creative director and chief executive, both of whom joined in 2015. (Other companies have followed suit, notably Louis Vuitton, which brought on streetwear designer Virgil Abloh as creative director in March 2018.)
  • In the luxury industry, much of which remains reluctant to embrace ecommerce, Gucci’s success shows that those that go online can reap large gains. These improvements have also allowed Kering to focus on luxury at a time when other companies are rejecting it. A decade ago, 17% of the company’s sales were luxury and in 2017, that percent rose to 70%, with no signs of stopping. In January 2018, the company announced it would spin off its shares of Puma to shareholders, making the German company independent, and in April 2018, it announced it would sell Volcom, a skatewear brand. Despite Kering’s rebuff of Puma and Volcom, if it manages to stay abreast of non-luxury trends and the potential role they could play in the luxury industry, the company will have the potential to expand its customer base to new demographics, much like Louis Vuitton is attempting now with Abloh.