The French luxury group Kering is down sharply this morning at Paris stock exchange after the announcement of the collapse in sales in the first quarter, which he had already warned the market about, while he doesn't even see the next few months looking good. Saint Laurent (-8%) and Bottega Veneta (-2%) also slowed down. Asia-Pacific especially weighs heavily. Late in the morning the stock on the Parisian CAC was trading at 321,60 euros, down by 8,36%, after having marked a low of 316,10.
For the luxury giant led by François-Henri Pinault, sales in the three months to March stood at 4,5 billion euros, down 11% (-10% at constant exchange rates). Above all, the slowdown of its flagship brand weighed heavily Gucci: the century-old Italian fashion house which represents half of the group's revenues and two thirds of the profits was in turn penalized by a weak demand in Asia as it faced a design overhaul.
François-Henri Pinault: a difficult year, conditioned above all by China
On March 19, Kering had anticipated a probable drop of around 10%. The group also said first-half operating profit will be "significantly lower" due to lower revenues and continued investments in brands. François-Henri Pinault, president and CEO of the French luxury group, does not mince words: “Kering's performance worsened significantly in the first quarter. Although we anticipated a difficult start to the year, stagnant market conditions, particularly in China, and the strategic repositioning of some of our houses, starting with Gucci, have exacerbated downward pressure on our revenues."
Kering's revenue decline includes a negative currency effect of 3% and a positive perimeter effect of 2% resulting from the consolidation of Creed. Directly operated retail revenue decreased 11% on a comparable basis as a result of lower store traffic. The performance in Western Europe, North America and Japan was in line with that of the fourth quarter of 2023, while a more marked decline was recorded, as anticipated by the management, in theAsia-Pacific area. The wholesale segment decreased by 7%, as the group continues to strengthen distribution exclusivity. “In light of this decline in revenue and our firm determination to continue to selectively invest in the long-term appeal and distinctiveness of our brands, we now expect to record significantly lower operating profit in the first half of this year. All of us are working tirelessly to help Kering overcome the current challenges and rebuild a solid platform for lasting growth,” said the Kering boss.
Gucci: revenues down 21%
By specifically analyzing the main maisons of the French luxury giant, the revenues of Gucci are equal to 2,1 billion euros, down 21% at current rates (-18% on comparable bases). Direct retail distribution saw sales decline 19% particularly impacted by a sharp decline in the Asia-Pacific region. The brand's collections designed by the new creative director Sabato De Sarno, gradually available in stores from mid-February, "have been very positively received, particularly in the ready-to-wear and footwear categories", specified the company. Wholesale turnover fell by 7%.
The other brands are also decreasing
The turnover also fell by 8%. Saint Laurent to €740 million, with retail remaining stable thanks to dynamic growth in Japan, sequential improvement in North America and relatively stable revenues in Western Europe. In Asia-Pacific, activity levels were affected by difficult market conditions, with wholesale declining by 25%. Royalties and other revenues increased by 27%, with dynamic performances in eyewear, perfumes and cosmetics.
Bottega Veneta reached 388 million euros thanks to a 9% increase in direct sales driven by double-digit growth in North America. The other maisons contributed to the group result with 824 million euros in the first quarter (-7%). For Balenciaga, the trend improved in Western Europe and Japan, while the house recorded double-digit growth in North America and proved resilient in Asia-Pacific. Alexander McQueen continues his creative transition, while Brioni has increased double-digit. Jewelery brands continued to record excellent performances, driven by the strong growth of Boucheron. On the other hand, the numbers for eyewear are running, which in the three months achieved sales of 463 million euros (+8%). Overall, the segment's revenues Kering eyewear and corporate were equal to 536 million euros, up 24%.
