French luxury giant Kering expects its profits to plummet in first half of 2024. After a drop in sales in the first quarter, owner François-Henri Pinault admits that his company’s performance has deteriorated significantly.
Profits 45 % lower
Kering, the parent company of luxury brands such as Gucci and Balenciaga, predicts that its operating profit could fall by as much as 45 % in the first half of the year. Its performance has worsened significantly in the first quarter, Pinault told the Financial Times.
Although the group had expected a challenging start to the year, weak market conditions (particularly in China) and the strategic repositioning of flagship Gucci added to the pressure on sales. In the first quarter, comparable sales went down 10 % to 4.5 billion euros – at Gucci, the decrease was even twice as fast.
Upmarket
Main brand Gucci is performing a turnaround under the creative leadership of designer Sabato de Sarno, who is to raise the label’s positioning to that of competitors like Hermès and Chanel, with a more timeless and minimalist look. His first designs are well received, but they have only just hit shops.
However, sales also fell at other Kering brands such as Yves Saint Laurent, Balenciaga and Alexander McQueen. Only Italian stronghold Bottega Veneta and the group’s eyewear division managed to achieve growth. Kering does expect sales trends to improve in the second half of the year.
