By Mimosa Spencer
PARIS (Reuters) -French luxury group Kering (EPA:PRTP) aims to double sales at its smaller, fast-growing fashion brand Yves Saint Laurent to 5 billion euros ($5.36 billion) in the medium term, it said in slides after the first day of an investor presentation on Wednesday.
Analysts said the target would likely prompt an increase in consensus estimates, with Citigroup (NYSE:C) noting it could be reached in 2026 or the following year, while current consensus expectations are for 3.9 billion euros in sales in 2026.
"The Saint Laurent story should strengthen Kering's investment case, although Gucci's contribution remains disproportionate," said Citigroup analysts.
The French luxury group is due to hold a presentation on its main label and profit engine, Gucci, which accounts for over half of group sales, on Thursday.
Gucci sales totalled 9.73 billion in 2021 and the brand is under market scrutiny as it has suffered more than rivals during a recent round of lockdowns in China.
Kering said it would expand Saint Laurent's geographic footprint, and make a deeper push into the United States, for example, as it increases the number of stores worldwide to between 300 and 350 in the medium term from 267 in March.
Product-wise, the label, headed by chief executive officer Francesca Bellettini, flagged its focus on leather goods, which make up the bulk of sales, while highlighting the importance of ready-to-wear for relaying the brand's image, and shoes as a "second growth engine".
The group is increasing production capacity internally, with plans to open a new leather goods production site in Tuscany next year after expanding a shoe-making site in the Veneto region last year.
Saint Laurent posted revenue of 2.52 billion euros in 2021, up 46% from a year earlier, twice the amount in 2016.
The group also targets higher profitability for the label in the medium term, with an EBIT margin seen rising to 33% from 28.3% at the end of last year.
While highlighting a "robust" track record and "particularly hot" brand momentum, analysts at JP Morgan said they wondered if the targets might take longer to reach than previous ones set five years ago, citing plans to increase the amount of sales per square meter in stores while also focusing on product categories that tend to generate lower store productivity.
($1 = 0.9321 euros)