Different quarters, different profit warnings. Kering cuts 2024 forecasts and now expects a recurring operating profit of around 2,5 billion euros. This is the third profit warning for the French luxury giant. Weighing on the group's accounts is once again the “big sick” Gucci, whose third-quarter revenue fell 26% to $1,6 billion. Celebrate Hermès instead, which once again seems immune to the difficulties that are weighing down the luxury sector and has achieved a third quarter of strong growth, driving the entire sector on the stock exchange.
Kering's Third Quarter
Kering closed the third quarter of 2024 with a turnover of 3,8 billion euros down 15% or 16% at constant exchange rates, a result that is affected by the exchange rate effect but in general by a drop in demand. In particular, at comparable data the drop in its own network was 17%, affected by the "low traffic in boutiques". Through a note, the company underlines that the trend worsened compared to the second quarter especially in the Asia-Pacific region and in Japan. In Europe and North America, the trend in activity was mixed depending on the brand. wholesale turnover recorded a 12% drop. In first nine months turnover was 12,8 billion (-12%). The consensus of analysts expected a turnover of around 4 billion for the quarter.
Kering Halves Profit Estimates: Third Profit Warning
According to new forecasts, 2024 operating result will settle around 2,5 billion euros, against 4,7 billion in 2023. This is the third profit warning launched by the French group: only last July it was indicated that the operating result of the second half of 2024 would be lower by around 30% compared to the second half of 2023. "The blame" would be on the uncertainty linked to the demand for luxury goods and the slowdown more marked than expected of third quarter sales.
In any case, the note highlights that the group will commit to ensuring the long-term development and growth of its maisons, working with determination to rationalize costs, its organization and the returns on its investments. In a long-term vision, Kering intends to invest in developing its brands, so that they enhance exclusivity and desirability, ensuring customers the highest standards of quality and durability.
Kering's number one, Francois Henri Pinault, promised a “profound transformation of the group and especially of Gucci, at a time when the entire luxury sector is facing unfavorable market conditions." 'Our absolute priority is to create the conditions for a return to healthy and lasting growth," added the manager.
Gucci: Revenues down 26%
In the third quarter of 2024, Gucci's revenues fell 26% (-25% on a comparable basis) to 1,6 billion euros. Sales in the company-owned store network recorded a 25% decline, affected by market conditions, especially in Asia-Pacific. “The renewal of the leather goods category, with the introduction of numerous new features at the end of the quarter, was well received”, the group notes. Wholesale sales fell by 38% on a like-for-like basis, affected by the channel rationalization strategy and the difficult market context.
The other brands
Revenues also fell Yves Saint Laurent which in the third quarter recorded a turnover of 670 million euros (-13% and -12%). Sales in company-owned stores fell by 12% on a like-for-like basis, wholesale sales by 20%. On the other hand, sales went well Bottega Veneta, with a turnover of 397 million (+4% and +5%). Growth in company-owned stores boasted a 9% increase in comparable data, driven mainly by sales in North America and Europe. The wholesale activity, however, recorded a -10% in comparable data.
Other brands overall they have a turnover of 686 million (-15% and -14%), with sales in owned stores down by 10% and wholesale sales down by 28%. The note highlights the performance of Balenciaga which he defines as “very good”. Brioni also continues on its growth path, while the jewelry houses have shown 'resistance'. Finally Kering Eyewear and Corporateand posted revenues of 440 million, up 32% or 4% on a like-for-like basis.
Hermès continues to grow: revenues up 11%
While the entire luxury sector is struggling due to the crisis in China, Hermès eclipses rival companies and with its luxury handbags attracting the wealthiest customers, it continues to grow.
In the third quarter of 2024, the French group from Faubourg Saint-Honorè recorded a turnover of 3,7 billion euros, up 10% or 11% at constant rates, standing out compared to other competing companies that instead have to deal with a weak demand for high-end goods.
Excellent trends in all regions, especially in Europe and Asia-Pacific. So much so that Axel Dumas, executive chairman of the company, thanked customers and employees who allowed it to record 'in an uncertain economic and geopolitical context, a robust performance'.
Hermès also grows in Asia thanks to its iconic bags
In the first nine months of 2024, Hermes recorded 7% growth in Asia, excluding Japan (0,6% and 1% at constant rates in the third quarter alone). “The region grew despite a traffic slowdown in Greater China observed since the end of the Chinese year.”
In Japan, furthermore, sales increased by 23% (+18,5% and +22,8%) and in Americas of 13% (+11% and +13,4%). In Europe, excluding France, turnover increased by 18% (18,8% and 20,3%), while in France alone France the increase is 14% (+13,1%).
At the product level the division Leather goods and saddlery, driven by the iconic Birkin, continued to play the leading role with a turnover of 4,7 billion (14,7% and 17,3% at constant exchange rates, in the third quarter alone +12,7% and +14%). ready-to-wear had a turnover of 3,29 billion (+12,3% and 14,8%, in the third quarter +12,1% and +13,5%). The division remained at a standstill Silk and Fabrics, with a turnover of 646 million (-0,2% and +2,2%, with an improvement in the third quarter to +3% and +4%). Perfumes and Beauty recorded revenues of 388 million (+5,9% and 6,8%; +10,2% and +10,6%). Jewelry and products for the home saw their turnover grow to 1,4 billion (14,7% and 17%; +12,7% +13,6%). On the other hand, the Watches, with a turnover of 434 million (-8,2% and -6,2%, with an improvement in the third quarter to +0% and +0,6%).
Stock Market: Hermès' accounts drag luxury
Hermès' solid performance lifts luxury stocks on the stock market, including Kering which, after a downward opening, gained almost 1% of its value by mid-morning. Hermès, for its part, rose by 1,6% to 2.110 euros per share, while lvmh, who published the accounts last October 16 (turnover down 2% in nine months), is up 2,64%. In Milan you can also buy on Moncler (+ 2%) and BRUNELLO CUCINELLI (+ 1,68%).
