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Kering's lagging sales may be indicative of a global slowdown

By Don-Alvin Adegeest


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Gucci storefront Credits: Gucci

Kering, the Paris-based luxury conglomerate, witnessed a significant downturn in sales during the third quarter, with group revenue plummeting by 13 percent to 4.5 billion euros. This sales slump extended across most of Kering's houses, including prominent brands like Bottega Veneta, Balenciaga, Gucci, and Saint Laurent.

Notably, Gucci, once Kering's golden goose, experienced an expected flat performance, reflecting the brand's ongoing turnaround efforts under a creative and managerial leadership change. Consequently, earnings fell by 14 percent, and wholesale dropped by 17 percent. The steepest decline in wholesale, however, was seen in Saint Laurent, which contracted by 38 percent as Kering sought to refine its distribution strategy.

Saint Laurent, despite enjoying robust growth in recent years, experienced a more uneven performance this season, resulting in a 17 percent decrease in turnover.

Kering appears to be grappling with weaker luxury goods demand compared to its industry peers. While LVMH reported single-digit growth, indicating a broader slowdown, it managed to navigate this deceleration more effectively. Gucci is still adapting to new leadership and an aesthetic transformation, while Balenciaga contends with lingering sales repercussions from previous controversies.

A changing geopolitical landscape

Geopolitical uncertainties are also affecting Kering's outlook. While markets like the US and Japan continue to exhibit growth, China's economic landscape is less promising. Kering's CFO, Jean-Marc Duplaix, highlighted the challenges of this shifting global landscape, emphasizing low visibility and mounting geopolitical concerns, which could potentially affect consumer sentiment. Aspirational clients in the US face ongoing pressures, while the macroeconomic environment in China is presenting its own set of hurdles.

Bottega Veneta
Yves Saint Laurent