Luxury fashion’s second-biggest group, Kering, reported fourth-quarter revenues that fell 4 percent on an organic basis, in line with analyst estimates.
Full-year 2023 sales at the French owner of brands including Gucci, Saint Laurent, Balenciaga and Bottega Veneta fell 2 percent on an organic basis and 4 percent in reported terms to €19.6 ($21.15). Full-year operating profit at €4.75 billion was slightly below estimates.
”These results are tolerable, with no major negative surprises aside from the margin dilution at Bottega Veneta and Other Houses [the unit that houses Balenciaga, Alexander McQueen and Boucheron],” RBC Capital Markets analyst Piral Dadhania wrote in a note to clients. ”Gucci is not performing worse than expected which is a relief, and the focus will turn to the earnings call and any potential commentary from management on margin outlook for Gucci as well as timing of inflection,” Dadhania added.
Indeed, in a series of meetings with financial analysts and the press Thursday, Kering is likely to face tough questions about why its brands are underperforming rival conglomerates like LVMH and Richemont. In a tough market,
While Gucci’s struggle to reinvigorate sales after a historic boom under designer Alessandro Michele ran out of steam has been well-documented. An overhaul of the brand’s image by new designer Sabato De Sarno is just now being rolled out to stores.
Markets may also decide to brush off the slowdown at powerhouse Saint Laurent, which could be a slight course correction following a multi-year surge in the US, which was a tricky market for many brands in 2023.
Its harder to explain why Balenciaga has continued do decline rather than bouncing back from last year’s catastrophic holiday quarter, when an ill-received marketing campaign put the brand at the center of US culture wars, sparking boycotts and vandalised boutiques. The basis of comparison was low.
Its equally unclear why Bottega Veneta’s business stumbled in the year of “quiet luxury” on social media, and as fashion fans swooned over Mathieu Blazy’s unpredictable yet discreet creative vision.
Stay tuned to BoF for more updates to this developing story.