Luxury fashion’s second-biggest group, Kering, reported fourth-quarter revenues that fell 4 percent on a comparable basis, in line with analyst estimates.
Full-year 2023 sales at the French owner of Gucci, Saint Laurent, Balenciaga and Bottega Veneta fell 2 percent on a comparable basis and 4 percent in reported terms to €19.6 billion ($21.15 billion). Full-year operating profit of €4.75 billion was slightly below estimates.
”These results are tolerable, with no major negative surprises aside from the margin dilution at Bottega Veneta and Other Houses [the unit that houses Balenciaga, Alexander McQueen and Boucheron],” RBC Capital Markets analyst Piral Dadhania wrote in a note to clients. ”Gucci is not performing worse than expected, which is a relief, and the focus will turn to the earnings call and any potential commentary from management on margin outlook for Gucci as well as timing of inflection,” Dadhania added.
Indeed, a series of meetings with financial analysts and journalists Thursday, Kering is likely to face tough questions about why its sales growth is lagging rival luxury conglomerates like LVMH and Richemont by double digits.
Kering anchor Gucci has struggled to reinvigorate sales after a historic boom under designer Alessandro Michele ran out of steam. An overhaul of the brand’s image by new designer Sabato De Sarno is just being rolled out to stores.
Markets may also decide to brush off the slowdown at powerhouse Saint Laurent as an understandable correction following a multi-year surge in the US, a tricky geography for many brands in 2023.
Its harder to explain why Balenciaga has continued to slump after last year’s catastrophic holiday quarter, when an ill-received marketing campaign put the brand at the center of America’s culture war, pushing sales off a cliff in the key market.
Its equally unclear why Bottega Veneta’s business stumbled in a year when “quiet luxury” dominated social media and fashion fans swooned over Matthieu Blazy’s creative vision.
Stay tuned to BoF for more updates to this developing story.