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MarketScreener Homepage  >  Equities  >  Swiss Exchange  >  Compagnie Financière Richemont    CFR   CH0210483332

COMPAGNIE FINANCIÈRE RICHEMONT

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Kering crown jewel Gucci banks on high-end gems for growth

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07/02/2019 | 01:27pm EDT
A view shows the new high end jewellery Gucci store on Place Vendome in Paris

PARIS (Reuters) - Gucci, the luxury brand that powers most of parent Kering profits, made its first steps in high-end jewellery on Tuesday with a dedicated store in Paris - part of its bid to expand its reach after a blowout fashion makeover.

Sales at the Italian label have grown at a breakneck pace since a turnaround under designer Alessandro Michele over the past three years, beating most industry rivals even as the rate of expansion slowed to 20 percent in the first quarter.

With its sights on one day overtaking peers Louis Vuitton, owned by Kering rival LVMH, or privately-held Chanel as the biggest luxury brand by revenue, Gucci is branching into new areas, including by recently rolling out cosmetics.

Its high-end jewellery venture will see it compete with heavyweights of that sector, including Richemont's Cartier and van Cleef & Arpels, with a specialised store on Paris' historic Place Vendome.

Gucci, best known for its handbags and as a clothing label, already sold gold-based jewels in the 1,500 to 2,000 euro (£1,792) range. Its new line, with pieces designed by Michele and inspired by mythical gardens and fauna, carries price tags of between 50,000 and 800,000 euros.

The push comes at a booming time for the jewellery market, with demand from Asian customers in particular riding high.

Estimated to be worth 18 billion euros globally by consultancy Bain - though branded jewellery represents a smaller chunk - it was the fastest growing segment of the personal luxury goods business last year alongside shoes, with worldwide revenues rising 7 percent.

"This is an attractive category with lots of blank space," Bernstein analyst Luca Solca said.

Gucci will have a long way to go to catch up with jewellery leaders, however - Cartier's sales are estimated at around 5 billion euros by analysts, ahead of U.S brand Tiffany, at $4.4 billion or LVMH's Bulgari at around 2.5 billion euros.

By contrast, Louis Vuitton, which branched into high-end jewellery in 2012, is estimated to make no more than several hundred million euros a year from jewels, as is Kering-owned jeweller Boucheron.

Paris-based Kering also has brands like Pomellato, Dodo and Qeelin in this category, although jewellery and watches are its smallest division.

The group reports first-half sales on July 25, with all eyes on whether Gucci can maintain its momentum.

(Reporting by Pascale Denis, Writing by Sarah White; Editing by Mark Potter)

By Pascale Denis

Stocks mentioned in the article
ChangeLast1st jan.
COMPAGNIE FINANCIÈRE RICHEMONT 0.22% 73.9 Delayed Quote.17.30%
KERING 1.10% 432.3 Real-time Quote.5.03%
LVMH MOËT HENNESSY VUITTON SE 0.80% 348.45 Real-time Quote.34.95%
TIFFANY & CO. 0.29% 80.8 Delayed Quote.0.07%
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Financials (EUR)
Sales 2020 15 172 M
EBIT 2020 2 294 M
Net income 2020 1 714 M
Finance 2020 3 274 M
Yield 2020 2,86%
P/E ratio 2020 22,5x
P/E ratio 2021 19,6x
EV / Sales2020 2,32x
EV / Sales2021 2,15x
Capitalization 38 447 M
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Mean consensus OUTPERFORM
Number of Analysts 27
Average target price 76,52  €
Last Close Price 68,07  €
Spread / Highest target 33,0%
Spread / Average Target 12,4%
Spread / Lowest Target -13,0%
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NameTitle
Jérôme Lambert Group Chief Executive Officer, COO & Director
Johann Peter Rupert Executive Chairman
Burkhart Grund Chief Financial Officer & Director
Alan Grant Quasha Non-Executive Director
Jan Rupert Non-Executive Director
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