Kering anticipates a substantial decline of 47% in operating income by the year 2024.
In a recent financial update, luxury conglomerate Kering has projected a substantial decline in its full-year 2024 operating income. The company expects a drop of over 47%, from 4.7 billion euros in 2023 to 2.5 billion euros in 2024.
The decline in Kering's performance began to falter midway through 2023, with the third quarter sales from its directly operated retail network showing a 17% decrease on a comparable basis. This downturn was not limited to Kering's main brand, Gucci, as revenue from its other houses also saw a combined 15% decrease, amounting to 686 million euros for the quarter.
Gucci, Kering's flagship brand, experienced a significant drop in sales. Gucci's Q3 sales from its directly operated retail network were down 25%, while wholesale revenue decreased by 38%. The brand's revenue for the quarter was 1.6 billion euros, a 26% decrease compared to the same period in 2023.
However, not all brands within Kering's portfolio have been affected equally. Bottega Veneta, another of Kering's luxury brands, saw a 4% increase in revenue to 397 million euros for the quarter. The growth was driven by strong performance in North America and Western Europe, with Bottega Veneta's directly operated retail network sales up by 9%.
The decline in Kering's performance has been attributed to a larger luxury slowdown in the market. In response, the company has made several strategic moves. In June 2024, Laurent Claquin was appointed as the group's chief brand officer, and in the same month, Ewa Abrams was promoted to Kering's president of Americas.
In a notable move, Francesca Bellettini was appointed as the CEO of Gucci, replacing Stefano Cantino. However, there is no explicit mention of a newly appointed person to Yves Saint Laurent's board in 2024. Alessandro Michele remains as the creative director connected to Valentino since March 2024, but there is no indication of a new board member for Yves Saint Laurent specifically.
Yves Saint Laurent's Q3 sales from its directly operated retail network were down 12%, and wholesale revenue decreased by 20%. The brand's revenue for the quarter was 670 million euros, a 13% decrease compared to the same period in 2023.
Despite the challenges faced by Kering, there have been some positive developments. The significant contribution of Creed, following its October 2023 acquisition, boosted the Kering Beauté division. Additionally, Kering's eyewear and corporate segment saw revenue rise 32% to 440 million euros.
In a move to further strengthen Gucci's leadership, Kering has named a new brand CEO for Gucci, Stefano Cantino, who will start in 2025.
As Kering moves forward, it will be interesting to see how these changes and strategies will impact the company's performance in the coming years.
