Kering sales down 9% as luxury slowdown stalls revamp By Reuters

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<span>© Reuters. FILE PHOTO: The logo of French luxury group Kering is seen at Kering headquarters in Paris, France, February 13, 2023. REUTERS/Sarah Meyssonnier/File Photo</span><br />
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<p>By Mimosa Spencer</p>
<p>PARIS (Reuters) – French luxury group <span itemscope="" itemtype="http://schema.org/Corporation"><span itemprop="name"> Kering </span></span> (EPA:) reported a bigger-than-expected drop in third quarter sales, underperforming major rivals as its top brand Gucci and other fashion labels all suffered from a slowing appetite for high-end clothes and accessories.</p>
<p>The French luxury group, which also owns Yves Saint Laurent, Balenciaga and Bottega Veneta, said on Tuesday that sales for the third quarter came in at 4.46 billion euros ($4.72 billion), a 9% drop at constant currencies and scope, below consensus expectations for a 6% decline.</p>
<p>Gucci, which accounts for over a half of Kering’s annual sales and is in a middle of a revamp following a disappointing performance over the past two years, saw a fall in sales of around 7%. </p>
<p>But revenues at smaller brands that until recently had enjoyed stellar growth also declined in the quarter, with Saint Laurent posting a 12% fall and Bottega Veneta down 7%.</p>
<p>Beyond worsening macroeconomic conditions, the company’s performance reflected Kering’s move to take distribution in house by reducing sales through wholesale channels in a bid to cut on promotions and move its labels upmarket, deputy CEO Jean-Marc Duplaix told reporters. </p>
<p>Rising inflation and economic uncertainty have curbed shoppers’ appetite for luxury after years of blockbuster demand, prompting investors to cut their exposure to the industry and trim forecasts.</p>
<p>But Kering is doing worse than rivals. </p>
<p>LVMH, the world’s biggest luxury group and one of Europe’s biggest companies by market value, this month also reported a slowdown in third-quarter sales — although it still clocked an increase in revenues with sales at its fashion and leather goods division up 9%. And Birkin bag-maker Hermes on Tuesday reported a rise in sales of 15.6%.</p>
<p>Kering has undertaken a sweeping overhaul aimed at reviving Gucci, which has struggled to capitalise on the strong post-pandemic rebound in luxury goods sales and lost ground to rivals like LVMH’s Dior and Louis Vuitton.</p>
<p>It reshuffled the brand’s top management and appointed a new creative director, who unveiled a style reset on a Milan runway in September.</p>
<p>The minimalist looks, which marked a departure from the eccentric styles that had fallen out of fashion, especially with younger Chinese, will not hit stores before early next year.</p>
<p>($1 = 0.9447 euros)</p>
<p>(This story has been refiled to correct the date in the dateline) </p>
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