World Footwear


Kering expects H1 recurring operating income to decline by 40-45%

Apr 25, 2024 France
Kering expects H1 recurring operating income to decline by 40-45%
The French-based luxury giant expects its first half operating profit to plummet by 40% to 45%, after reporting a 10% year-over-year fall in sales, largely due to the weak performance of Gucci
Kering’s performance worsened considerably in the first quarter”, said François-Henri Pinault, Chairman and Chief Executive Officer of Kering. “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”, he added.

First Quarter Results

In the first quarter of the current fiscal year, Kering’s revenue amounted to 4.5 billion euros, reflecting a year-over-year decline as reported of 11% or 10% on a comparable basis. This decrease includes a negative currency impact of 3% and a positive scope effect of 2% from the consolidation of Creed.

By channel, revenue from the company’s directly operated network fell by 11% in the three months to the end of March, as compared to the same period last year, due to lower store traffic – the largest decline was in Asia Pacific. On the other hand, wholesale and other segment revenue decreased by 7%, as compared to the first quarter of 2023.

As previously warned, Gucci’s sales in the first three months of the current financial year decreased by 21%, or 18% at current exchange rates, to 2.1 billion euros, on a comparable basis to the same period last year. According to Vogue Business, Kering CFO Armelle Poulou told analysts that sales had been hit by a “huge drop in traffic in Asia Pacific” and that she did not expect an improvement in the second quarter.

The Group’s other main houses also struggled in the first quarter, although to a lesser extent. Yves Saint Laurent’s revenue totalled 740 million euros, down by 8% or 6% at current exchange rates, and Bottega Venetta’s revenue reached 388 million euros, down by 2% on both a reported and a current exchange rate basis, as compared a similar period of the previous year.

In addition, the first quarter revenue from the Other Houses of the group, including Balenciaga and Alexander McQueen decreased by 7%, or 6% at current exchange rates, to 824 million euros.

“Taking into account the deterioration of its revenue trends”, announced the company, Kering anticipates a decline of 40 to 45% in the first half of 2024 recurring operating income, on a comparable basis to the first half of 2023.

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