Kering, a prominent player in the luxury fashion industry, grappled with significant challenges in the first quarter of 2024, marking a stark decline in its performance. François-Henri Pinault, Chairman and CEO, acknowledged the tough start to the year, citing sluggish market conditions, especially in China, and strategic shifts within key brands, notably Gucci, as exacerbating factors impacting the company's revenue trajectory.
Consequently, Kering anticipates a substantial drop in operating profit for the first half of the year, underscoring the urgency to navigate through current headwinds and rebuild a resilient foundation for sustained growth.
In the first quarter of 2024, Kering reported a notable 11 per cent decrease in revenue, amounting to €4.5 billion. This decline, both as reported and on a comparable basis, reflects the ongoing transitions within the group's portfolio of luxury houses. Within its retail network, revenue plummeted by 11% on a comparable basis, primarily due to diminished store traffic, with Asia-Pacific experiencing a sharper decline compared to other regions.
Gucci, Kering's flagship brand, faced a substantial revenue drop of 21 per cent as reported and 18 per cent on a comparable basis, totaling €2.1 billion. Despite positive reception for its new collections, particularly in ready-to-wear and shoes categories, Gucci's retail network revenue suffered a 19 per cent decline on a comparable basis, prominently affected by the downturn in Asia-Pacific.
Yves Saint Laurent witnessed a more moderate decline, with revenue down 8 per cent as reported and 6 per cent on a comparable basis, amounting to €740 million. While the brand demonstrated resilience in certain regions like Japan and North America, tough market conditions in Asia-Pacific impacted its overall performance.
Bottega Veneta, however, showed signs of stability with a marginal 2 per cent decrease in revenue as reported and a 2 per cent increase on a comparable basis, totaling €388 million. The brand experienced growth in its retail network, particularly in North America, Western Europe, and the Middle East, offsetting a slight decline in Asia-Pacific.
The revenue from Kering's Other Houses totaled €824 million, marking a 7 per cent decline as reported and 6 per cent on a comparable basis. Notably, Balenciaga and Boucheron demonstrated resilience and growth in various regions.
Looking ahead, Kering remains committed to its long-term vision of fostering brand desirability, exclusivity, and sustainability. However, amidst ongoing economic uncertainties, the company anticipates a significant decline in recurring operating income for the first half of 2024. Despite this, Kering emphasizes prioritizing investments supporting the strategic development of its brands while implementing cost optimization measures to navigate through the current challenging landscape.
