Kering's Q1 2024 Revenue Down : Gucci's Challenges Trigger A Significant Profit Warning

Kering, a leading global luxury conglomerate, oversees the growth and direction of a distinguished portfolio of fashion, leather goods, and jewelry brands including Gucci, Saint Laurent, Bottega Veneta, Balenciaga, Alexander McQueen, Brioni, Boucheron, Pomellato, DoDo, Qeelin, and Ginori 1735, alongside Kering Eyewear and Kering Beauté.  As of 2023, Kering boasted a workforce of 49,000 employees and achieved a revenue of €19.6 billion. This year however, Kering’s revenue for the first quarter of 2024 was down 11% as reported and down 10% on a comparable basis to €4.5 billion.

“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. 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. All of us are working tirelessly to see Kering through the current challenges and rebuild a solid platform for enduring growth.”
François-Henri Pinault, Chairman and Chief Executive Officer

The decline in revenue is attributed to a 3% negative impact from currency fluctuations and a 2% positive effect from the inclusion of Creed in the consolidation. Revenue from the company's directly operated retail network decreased by 11% on a comparable basis, primarily due to reduced foot traffic in stores. Performance in Western Europe, North America, and Japan mirrored that of the fourth quarter of 2023, while a more significant decrease was observed in the Asia-Pacific region. In the Wholesale and Other segment, revenue declined by 7% on a comparable basis as the Group focuses on enhancing the exclusivity of its brand distribution channels.

In the initial quarter of 2024, Gucci's revenue totaled €2.1 billion, marking a 21% decrease as reported and an 18% decline on a comparable basis. Revenue from the company's directly managed retail outlets also experienced a comparable basis drop of 19% during the same period.

Yves Saint Laurent recorded revenue of €740 million in the initial quarter of 2024, indicating an 8% decrease. Bottega Veneta's revenue for the same period amounted to €388 million, reflecting a 2% decline. Additionally, revenue from the Group's Other Houses amounted to €824 million in the first quarter, showing a 7% decrease as reported.

Taking into account the deterioration of its revenue trends, the Group now anticipates a decline of 40 to 45% in first-half 2024 recurring operating income compared to the first half of 2023.