French luxury giant Kering’s recent sales decline has sent ripples through the fashion industry. With Gucci, a major revenue driver, experiencing a slowdown, it begs the question: is this an isolated incident or a harbinger of a shift in the luxury retail market?
๐๐๐ซ๐ข๐ง๐ ’๐ฌ ๐๐ซ๐จ๐๐ข๐ญ ๐๐๐ซ๐ง๐ข๐ง๐ : ๐๐ก๐จ๐๐ค๐ฌ ๐๐ง๐ ๐๐ญ๐ซ๐ฎ๐ ๐ ๐ฅ๐๐ฌ
Last month, Kering issued a rare profit warning, sending shockwaves through the market. This signaled a tougher-than-expected turnaround for Gucci, one of its star brands. Gucci’s struggles have been a focal point, impacting Kering’s overall financial health.
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๐ข๐ซ๐ฌ๐ญ-๐๐ฎ๐๐ซ๐ญ๐๐ซ ๐๐๐ฌ๐ฎ๐ฅ๐ญ๐ฌ: ๐ ๐๐๐๐ฅ๐ข๐ญ๐ฒ ๐๐ก๐๐๐ค
The first quarter of 2024 painted a concerning picture for Kering. Gucci’s organic revenues declined by a significant 18 percent, although slightly better than the revised market estimate. Group revenues fell by 11 percent to โฌ4.5 billion, reflecting a 10 percent decline in comparable terms. Disappointingly, other Kering brands, including Saint Laurent, also posted further sales declines.
๐๐ซ๐จ๐๐ข๐ญ ๐
๐จ๐ซ๐๐๐๐ฌ๐ญ: ๐ ๐๐จ๐ฐ๐ง๐ญ๐ฎ๐ซ๐ง ๐๐ง๐ ๐๐ญ๐ซ๐๐ญ๐๐ ๐ข๐ ๐๐ก๐ข๐๐ญ
Kering now anticipates a steep 40 to 45 percent decline in first-half 2024 recurring operating income compared to the first half of 2023. This projection reflects both the deterioration in revenue trends and the strategic repositioning of certain houses, starting with Gucci. The company is ramping up spending on advertising and events to support the Gucci turnaround and revitalize other labels like Balenciaga and Alexander McQueen.
๐๐๐ซ๐ค๐๐ญ ๐๐ฆ๐ฉ๐ฅ๐ข๐๐๐ญ๐ข๐จ๐ง๐ฌ: ๐ ๐๐ซ๐จ๐๐๐๐ซ ๐๐ก๐๐ฅ๐ฅ๐๐ง๐ ๐
Kering’s performance decline underscores broader challenges in the luxury sector. Sluggish market conditions, especially in China, have exacerbated downward pressures on Kering’s revenue. In contrast, LVMH Moรซt Hennessy Louis Vuitton’s key fashion and leather goods division demonstrated resilience, with a 2 percent year-over-year sales increase in the first quarter.
๐๐จ๐จ๐ค๐ข๐ง๐ ๐๐ก๐๐๐: ๐ ๐๐๐๐ ๐ญ๐จ ๐๐๐๐ฉ๐ญ
In summary, Kering’s profit drop and Gucci’s struggles signal caution for the luxury retail market. Industry players must navigate geopolitical uncertainties and adapt to changing consumer preferences to thrive in this competitive landscape.
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