“We had a tremendous start to the year with Gucci Division first quarter revenues up by 27% -Domenico De Sole, President & Chief Executive Officer of Gucci Group N.V. commented- showing strong growth in all major markets and across all product categories, with leather goods up 38%; ready-to-wear up 31% and jewelry up 132%. We believe that this demonstrates the global appeal of the Gucci brand and the success of our strategic initiatives. I am also delighted to report that momentum is continuing into the second quarter, with Gucci retail sales showing 30% plus growth over last year in May and June.”
During the first quarter, Gucci Division revenues increased by more than 20% in all regions.
Gucci posted outstanding growth in its core leather goods categories, as handbags, small leather goods and luggage all advanced by more than 30% in the first quarter, reflecting the success of the Spring/Summer collection. Continued growth in ready-to-wear turnover reflects the increased selling space dedicated to the product, better customer service and, management believes, Gucci’s growing reputation as a ready-to-wear house. Sales from Directly Operated Stores increased 31.5% to US$ 223.7 million, while wholesale distribution turnover increased 37.0% over the same period of last year.
Sales to franchise, duty-free and department and specialty store customers all increased in excess of 20%, demonstrating the continuing strong performance of the US distribution as well as renewed demand from Asian-based customers. Timepiece distribution sales decreased 0.5% to US$ 47.3 million as a result of Swiss Franc depreciation against the US Dollar. On a constant currency basis, Timepiece distribution revenues would have increased 6.8% in the first quarter of 2000.
Gucci Division gross profit during the first quarter increased 28.6% to US$ 230.5 million representing 67.2% of sales against 66.4% in the first quarter of 1999.
Gross margin strength derived principally from strong retail turnover, increased leather goods sales and a favorable US Dollar/Euro exchange rate. Gucci Division operating profit before goodwill amortization increased 26.5% to US$ 83.2 million from US$ 65.8 million in the first quarter of 1999, corresponding to an operating margin of 24.2% (1Q 1999: 24.3%).
