investiment.io
Kering's Profits Plunge as Gucci Sales Decline
Kering, the French luxury group, faced a challenging first quarter with Gucci's sales dropping by 10% due to slowing demand in Asia and brand restructuring, leading to a significant decline in the company's revenue and operating profit projections for the first half of the year.
Kering SA, the prestigious French luxury conglomerate known for its high-end brands such as Gucci and Yves Saint Laurent, has encountered a significant downturn in its financial outlook, largely attributed to a decline in Gucci sales. The company witnessed a sharp drop in its shares, which fell more than 7%, following an issued profit warning that highlighted a concerning dip in performance during the first quarter.
The luxury fashion group pointed to a "considerably worsened" financial situation in the initial months of 2024, with a notable revenue decrease of 11% to €4.5 billion for the first quarter. This downturn has been largely blamed on a slowdown in demand from the Chinese market and ongoing restructuring efforts within its fashion houses, particularly Gucci. As a consequence of these challenges, Gucci experienced a significant sales reduction of 21%, leading Kering to brace for a stark reduction in operating profit for the first half of the year. The group is now expecting a decline in first-half recurring operating income in the range of 40-45% year on year.
The backdrop to this financial strife is attributed to what the company describes as a "normalization" in the luxury sector and transitions within its individual fashion houses. Additionally, currency fluctuations imposed a 3% impact. While Gucci's sales plummeted by 18% on a like-for-like basis, other brands within the Kering portfolio showcased a mixed performance. Yves Saint Laurent and other houses reported a decrease in sales by 6%, whereas Bottega Veneta saw a modest increase in sales by 2% on a like-for-like basis. Encouragingly, Kering Eyewear & Corporate segment witnessed a growth of 9%.
Amid these financial headwinds, Kering noted that Gucci's new collections, launched mid-February, have been receiving positive feedback, especially in the ready-to-wear and shoes categories. This could signal a potential rebound or at least offer some cushion against the financial turbulence experienced in the first quarter.
Geographically, the most significant sales drop was observed in the Asia-Pacific region, while trends in Western Europe, North America, and Japan remained consistent with the previous quarter's performance. This geographic breakdown further underscores the critical role the Asian market, particularly China, plays in the luxury sector's financial health.
As Kering SA navigates these challenging times, the group's firm commitment to investing in the long-term appeal and distinctiveness of its brands remains unchanged. However, the current financial predicaments indicate a testing period ahead for the luxury conglomerate, especially for its flagship brand Gucci, as it strives to recapture its lost momentum in the wake of waning Asian demand and strategic brand restructuring efforts.
Articles published about this story
- forbes.comforbes.com
- reuters.comreuters.com
- youtube.comyoutube.com
- marketwatch.commarketwatch.com
- reuters.comreuters.com
- proactiveinvestors.co.ukproactiveinvestors.co.uk
- reuters.comreuters.com
More stories
- investiment.ioinvestiment.io
Warren Buffett addressed shareholders with Berkshire Hathaway's impressive Q1 earnings, showing substantial growth in revenue and operating income. The company's record cash holdings and stock portfolio gains were highlighted, reflecting a positive outlook.
- investiment.ioinvestiment.io
Warren Buffett's investment in Apple stock in 2016 has yielded significant returns despite his emphasis on slow wealth accumulation. JPMorgan analyst Samik Chatterjee discussed Apple's buyback plan and growth potential in China. Bloomberg Intelligence Analyst Anurag Rana reviewed Apple's earnings and AI strategy with financial experts. Apple's recent $110 billion stock buyback program surpassed its previous record, leading Bank of America to raise its price target post the earnings report that highlighted a revenue decline.
- investiment.ioinvestiment.io
Fortinet (Nasdaq: FTNT) achieved strong financial results in Q1 2024, with total revenue reaching $1.35 billion, a 7% increase year over year. Despite better-than-expected earnings, the stock fell 9% as billings slightly missed expectations, reflecting concerns about future enterprise spending and competitive pressures.
- investiment.ioinvestiment.io
The Securities and Exchange Commission charged Trump Media & Technology Group Corp's auditing firm with massive fraud, impacting over 1,500 SEC filings and causing the company's stock to open in the red.
- investiment.ioinvestiment.io
Hershey Company (HSY) reports impressive first-quarter results, surpassing market expectations with increased sales and earnings. The company reaffirms its 2024 outlook, leading to a 1.7% premarket stock rally.
- investiment.ioinvestiment.io
Palantir Technologies (PLTR) is on investors' radar as it prepares to report first-quarter earnings. Analysts are focused on commercial revenue growth and the sustainability of its AI development. Despite recent fluctuations, the stock has shown strong performance, gaining 248% since the start of 2023. Analysts anticipate the upcoming earnings report for further insights.
- investiment.ioinvestiment.io
Exxon Mobil successfully completes its acquisition of Pioneer Natural Resources for $60 billion, establishing dominance in the Permian Basin with vast oil equivalent resources. Former Pioneer CEO barred from Exxon's board amid allegations of colluding with OPEC.
- investiment.ioinvestiment.io
Greg Abel, poised to succeed Warren Buffett at Berkshire Hathaway, faces scrutiny over acquisition decisions. Despite acknowledging he won't match Buffett's prowess, the board expresses confidence in Abel's leadership. Buffett's appearance at the 60th annual meeting marks a significant event following partner Charlie Munger's passing.
- investiment.ioinvestiment.io
DraftKings Inc. reported strong first-quarter financial results, leading to a spike in revenue and an increase in full-year sales guidance. The positive earnings report boosted the company's stock price, signaling confidence in its performance and future prospects in the online sports entertainment industry.
- investiment.ioinvestiment.io
The April jobs report is eagerly anticipated, with expectations of a continued moderation in the labor market due to various economic factors. Various forecasts predict larger increases despite slight signs of hiring slowdowns.