Dive Brief:
- Kering Group third quarter revenue for fiscal 2024 was down 15% to 3.8 billion euros, or about $4.1 billion, according to a Wednesday release.
- The company projected a full-year 2024 operating income drop by more than 47% to 2.5 billion euros from 4.7 billion in 2023. In presenting its revised recurring operating income projections, Kering said there are “major uncertainties likely to weigh on demand among luxury consumers in the coming months” and it cited “the larger-than-expected slowdown in the third quarter of the year.”
- Gucci revenue was down 26% to 1.6 billion euros for the period, while Yves Saint Laurent revenue was down 13% to 670 million euros and Bottega Veneta revenue was up 4% to 397 million euros. Revenue from the company’s other houses, which include Balenciaga, Alexander McQueen, Brioni and jewelry, was down 15% combined to 686 million euros.
Dive Insight:
Kering’s poor performance in Q3 was a continuation of the company’s downward earnings trajectory, which began to falter midway through 2023 and have dropped every quarter since then. For the first nine months of the year, Kering’s revenue was down 12% to 12.8 billion euros.
The decline reflects a larger luxury slowdown, as seen in the latest earnings declines at LVMH, Zegna and Ferragamo.
François-Henri Pinault, chairman and CEO, said the company is working on a turnaround.
“With discipline and determination, we are executing a far-reaching transformation of the Group, and at Gucci in particular, at a time when the whole luxury sector faces unfavorable market conditions,” Pinault said in a statement. “This severely impacts our performances in the short term. Our absolute priority is to build the conditions for a return to sound, sustainable growth, while further tightening control over our costs and the selectivity of our investments. We have the right strategy, organization, and talents to achieve these goals.”
New executive appointments in 2024 have included Ewa Abrams, who was promoted to Kering's president of Americas in July, replacing Laurent Claquin, who became the group’s chief brand officer in June.
Kering also named a new brand CEO for Gucci, Stefano Cantino, who is set to begin early in 2025.
Third quarter sales from Kering’s directly operated retail network were down 17% on a comparable basis. The company attributed the weak results to the adverse effects of lower store traffic and sluggish regional comps compared to Q2, particularly in Asia-Pacific and Japan, “the latter of which suffered a significant slowdown.”
Gucci Q3 sales from its directly operated retail network were down 25% on a comparable basis, and its wholesale revenue was down 38% on a comparable basis. Meanwhile, Yves Saint Laurent’s directly operated retail network sales were down 12% in Q3, with wholesale revenue down 20% on a comparable basis.
By contrast, Bottega Veneta directly operated retail network sales were up 9% in Q3, driven by double-digit growth in North America and Western Europe, per the release. However, wholesale revenue for the brand was down 10% on a comparable basis.
Kering’s eyewear and corporate segment saw revenue rise 32% to 440 million euros. That segment also includes the Kering Beauté division, which saw a boost from “the significant contribution of Creed,” following its October 2023 acquisition and subsequent consolidation, the company said.
