Kering forecasts sharp decline in H1 operating profit
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The company said in a statement that revenue from the directly operated retail network fell 11 percent on a comparable basis, as a result of lower store traffic. Revenue in the wholesale and other segments was also down 7 percent on a comparable basis.
“Kering’s performance worsened considerably in the first quarter. While we had anticipated a challenging start to the year, sluggish market conditions, notably in China, and the strategic repositioning of certain of our Houses, starting with Gucci, exacerbated downward pressures on our topline,” said François-Henri Pinault, Kering’s chairman and chief executive officer.
Kering forecasts considerable drop in H1 operating income
The company further said that in 2024, in a context of ongoing normalisation of the sector’s growth, the impact of Kering’s investment strategy will weigh on the group’s recurring operating income , which should post a decline compared to the level reported in 2023, particularly in the first half of the year.
Taking into account the deterioration of its revenue trends, the group now anticipates a decline of 40 to 45 percent in first-half recurring operating income compared to the first half of 2023.
Commenting on the outlook, Pinault said: “In view of this revenue decline, together with our firm determination to continue investing selectively in the long-term appeal and distinctiveness of our brands, we now expect to deliver sharply lower operating profit in the first half of this year.”
Kering posts drop in Q1 revenues at Gucci and other houses
In the first quarter of 2024, Gucci’s revenue amounted to 2.1 billion euros, down 21 percent as reported and down 18 percent on a comparable basis. Revenue from the directly operated retail network fell by 19 percent on a comparable basis in the first quarter, and was particularly impacted by a sharp decline in Asia-Pacific.
The brand’s wholesale revenue fell 7 percent on a comparable basis.
Yves Saint Laurent’s revenue amounted to 740 million euros, down 8 percent as reported and down 6 percent on a comparable basis. Revenue from the directly operated retail network was down 4 percent on a comparable basis driven by growth in Japan, a sequential improvement in North America, and relatively stable revenue in Western Europe. In Asia-Pacific, business levels were affected by tough market conditions.
The company added that Yves Saint Laurent’s wholesale revenue was down 25 percent on a comparable basis, while royalties and other revenue rose 27 percent on a comparable basis, with dynamic performance across eyewear, perfumes and cosmetics.
Bottega Veneta’s revenue totaled 388 million euros, down 2 percent as reported and up 2 percent on a comparable basis with revenue from the directly operated retail network up 9 percent on a comparable basis, driven by double-digit growth in North America, Western Europe and the Middle East. Revenue in Asia-Pacific fell slightly. Wholesale revenue was down 25 percent on a comparable basis.
Revenue from the group’s other houses totaled 824 million euros in the first quarter, down 7 percent as reported and 6 percent on a comparable basis. In the directly operated retail network, revenue was up 3 percent on a comparable basis. Balenciaga saw trends improve in Western Europe and Japan, achieved double-digit growth in North America and remained resilient in Asia-Pacific. Brioni, the company said, posted double-digit growth. Wholesale revenue was down 25 percent on a comparable basis.
Kering Eyewear’s revenue amounted to 463 million euros, up 8 percent on a comparable basis. Overall, revenue from the Kering Eyewear and corporate segment amounted to 536 million euros, up 24 percent as reported and 9 percent on a comparable basis.