Yahoo Finance Kering Profits Expected to Tank in First Half of 2024
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Kering's recurring operating income for the first half of 2024 is expected to decline by up to 40-45%, compared to the same period last year, the luxury conglomerate announced on Tuesday.
In a performance update for investors, the parent company of Gucci, Bottega Veneta and Saint Laurent revealed that its revenue for 2024 is already down 11% in the first quarter to €4.5 billion ($4.8 billion). CEO François-Henri Pinault wrote that, despite anticipating a "challenging" start to the year, performance "worsened considerably" due to "sluggish market conditions, notably in China," as well as "the strategic repositioning of certain of our Houses, starting with Gucci."
Gucci seemingly bore the brunt of these losses, with the brand's revenue down down 21% in Q1 2024, to €2.1 billion ($2.2 billion), which Kering attributed to a sharp decline in the Asia-Pacific region. These plummeting numbers come amid major turnover at the Italian fashion house: Following Alessandro Michele's departure in late 2022, a studio team led design until Sabato de Sarno's debut runway last September. (That collection hit stores in February. Q1 spans from Jan. 1 through March 31, 2024.)
Saint Laurent also saw its revenue go down 8%, despite "strong growth in Japan." Bottega Veneta had the least harsh decline, with sales down 2% down on a reported basis. Kering's Eyewear and Corporate business, however, saw revenue increase by 24%, bolstered by an 8% increase in eyewear revenue and an unspecified amount from Kering Beauté's acquisition of Creed.
"Taking into account the deterioration of its revenue trends, the Group now anticipates a decline of 40 to 45% in first-half 2024 recurring operating income compared to the first half of 2023," Kering wrote, in its outlook for investors. "The group prioritizes expenses and initiatives supporting the long-term development and growth of its houses, while pursuing with determination the actions required in the current situation to optimize its cost structure."
LVMH, Kering's leading competitor, also saw a decrease in revenue for 2024's first quarter, though the drop was much less severe. (The French conglomerate reported a 2% decrease in overall revenue.) Altogether, the signs of the luxury boom slowing down are clear.
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