Companies

Kering issues third profit warning of the year

Oct 24, 2024 France

The owner of Gucci and Yves Saint Laurent has issued a third profit warning amid a downturn in the luxury market and after posting a “larger-than-expected” slowdown in the third quarter

The French-based luxury group now expects a recurring operating income of 2.5 billion euros for 2024, a decline of 47% from the 4.75 billion euros last year. Kering blamed the decision on “the major uncertainties likely to weigh on demand among luxury consumers in the coming months” and “the larger-than-expected slowdown in the third quarter of the year”.

In the third quarter, the group’s revenue amounted to 3.8 billion euros, a decrease of 15% as reported and 15% on a constant currency basis, as compared to the same period of 2023.

In particular, sales from the directly operated retail network were down by 17% year-on-year on a constant currency basis as a result of deteriorating trends, particularly in Asia-Pacific and Japan, where the latter experienced a significant slowdown. Wholesale and other revenue decreased by 12% year-on-year on a constant currency basis.

Gucci, the group’s golden goose, continues to perform below expectations. In the third quarter of the current financial year, the brand’s revenue totalled 1.6 billion euros, a decrease of 26% on a reported basis and 25% on a constant currency basis, as compared to the same period last year. The brand is amid a turnaround under creative director Sabato De Sarno, with Stefano Cantino set to take over as chief executive officer on the 1st of January.

Yves Saint Laurent’s third quarter revenue totalled 670 million euros, down by 12% as reported and 12% on a constant currency basis, on a comparable basis to the same quarter of 2023. In the same period, revenue from the group’s Other Houses totalled 686 million euros, down by 15% as reported and by 14% on a constant currency basis.

On the contrary, in the third quarter, Bottega Veneta’s revenue was 397 million euros, increasing by 4% as reported and by 5% on a constant currency basis, as compared to the same period of last year, driven by double-digit growth in North America and Western Europe.

“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 unfavourable market conditions. 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”, commented François-Henri Pinault, Chairman and Chief Executive Officer of Kering.

Image Credits: crfashionbook.com

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