Kering, in its half-year financial report released on Wednesday, disclosed a notable decline in revenues, with a significant portion attributed to Gucci’s underperformance. The luxury conglomerate’s overall revenues fell by 11% for the six months ending June 30.
Gucci, which constitutes approximately half of Kering’s sales and two-thirds of its profits, experienced a sharp 20% decline in revenues, amounting to €4.09 billion EUR (or an 18% decrease on a currency-adjusted basis). Efforts to rejuvenate the brand under CEO Jean-François Palus and creative director Sabato de Sarno, known for their minimalist design approach, have struggled amidst a broader slowdown in luxury demand.
Saint Laurent also faced challenges, with revenues dropping by 9% (or 7% in currency-adjusted terms) to €1.4 billion EUR. The conglomerate’s “Other Houses” division, encompassing brands like Balenciaga and Alexander McQueen, saw a decline of 7% (or 6% on a currency-adjusted basis) to €1.7 billion EUR. Bottega Veneta, however, maintained flat revenues compared to the previous year.
Geographically, Kering encountered significant setbacks in the Asia-Pacific region, excluding Japan, where revenues plummeted by 22% to €2.9 billion EUR. Western Europe also saw a decline of 7%, totaling €2.55 billion EUR, while North America experienced a 9% decrease, amounting to €2.1 billion EUR. In contrast, Japan saw an 8% increase in sales primarily due to price differentials.
Given the uncertainties surrounding luxury consumer demand in the near future following the subdued performance in the first half of 2024, Kering anticipates a potential 30% decrease in recurring operating income for the second half of the year compared to 2023.
