Luxury slowdown impacts Kering's Q3, sales fall 16 percent

Kering Group revenue in the third quarter was 3.8 billion euros, down 15 percent reported and 16 percent on a comparable basis.

In the first nine months, the group generated revenue of 12.8 billion euros, down 12 percent both as reported and on a comparable basis.

“With discipline and determination, we are executing a far-reaching transformation of the group, and at Gucci in particular, at a time when the whole luxury sector faces unfavourable market conditions. This severely impacts our performances in the short term,” said François-Henri Pinault, Kering’s chairman and chief executive officer.

Kering warns on profits after Q3 sales drop

The company’s sales from the directly operated retail network were down 17 percent on a comparable basis, adversely affected by lower store traffic.

Kering said in a statement that trends in the various regions weakened by comparison with the second quarter and particularly in Asia-Pacific and in Japan, the latter of which suffered a significant slowdown. In North America and Western Europe, activity was contrasted across group houses.

Wholesale and other revenue was down 12 percent on a comparable basis.

Commenting on the outlook, the company said, considering the major uncertainties likely to weigh on demand among luxury consumers in the coming months and following the larger-than-expected slowdown in the third quarter, it expects recurring operating income of approximately 2.5 billion euros.

Kering posts 26 percent revenue decline at Gucci

In the third quarter, Gucci revenue amounted to 1.6 billion euros, down 26 percent reported and 25 percent on a comparable basis. Kering added that sales from the directly operated retail network were down 25 percent on a comparable basis, the house being particularly impacted by market conditions, especially in Asia-Pacific. Gucci’s wholesale revenue was down 38 percent on a comparable basis.

Yves Saint Laurent’s third-quarter revenue was 670 million euros, down 13 percent as reported and down 12 percent on a comparable basis. Sales from the directly operated retail network were down 12 percent on a comparable basis, while wholesale revenue fell 20 percent on a comparable basis.

Revenues at Bottega Veneta of 397 million euros in the third quarter, increased by 4 percent reported and 5 percent on a comparable basis with revenue in the directly operated retail network up 9 percent on a comparable basis, driven by double-digit growth in North America and Western Europe. Wholesale revenue was down 10 percent on a comparable basis.

Revenue from the group’s other houses totaled 686 million euros, down 15 percent reported and 14 percent on a comparable basis. Sales from the directly operated retail network were down 10 percent on a comparable basis and wholesale revenue was down 28 percent on a comparable basis.

Kering Eyewear and corporate segment revenue amounted to 440 million euros, up 32 percent as reported. Kering Eyewear’s revenue rose by 4 percent on a comparable basis during the quarter. The segment also encompasses the activities of Kering Beauté, boosted by the contribution of Creed.