On February 11, French luxury conglomerate Kering released its Q4 2024 financial results, reporting revenue of $4.5 billion (€4.39 billion), a 12% decline year-over-year. While the figure slightly exceeded the London Stock Exchange Group (LSEG) forecast, it reflects the broader slowdown in the luxury market.
Gucci’s Declining Sales Impact Kering’s Performance
The primary factor behind Kering’s downturn is the continued decline in sales at its flagship brand, Gucci. In Q4, Gucci’s revenue dropped to $1.92 billion, marking a 24% year-over-year decline. Since Gucci accounts for nearly 50% of Kering’s total revenue, its downturn has placed significant pressure on the entire group’s growth.
Meanwhile, Saint Laurent also faced headwinds, with sales declining by 8%. However, Bottega Veneta’s operating margin increased by 12%, significantly exceeding market expectations. Additionally, while the “Other Houses” division, which includes Balenciaga and Alexander McQueen, saw a 4% decline, Kering’s eyewear and corporate sales grew by 10%, maintaining steady growth.
Kering’s Chairman and CEO, François-Henri Pinault, commented on the company’s direction in light of its recent financial performance: “In a difficult year, we accelerated the transformation of several of our Houses and moved determinedly to strengthen the health and desirability of our brands for the long term. Across the Group, and at Gucci first and foremost, we made critical decisions to raise the impact of our communications, sharpen our product strategies, and heighten the quality of our distribution, all in the respect of the creative heritage that distinguishes our brands. We secured our organization, made key hirings, sped up execution, and intensified the efficiency of our operations. Our efforts must remain sustained and we are confident that we have driven Kering to a point of stabilization, from which we will gradually resume our growth trajectory.”
A key part of this transformation is the recent announcement of Gucci’s Creative Director Sabato De Sarno’s departure. De Sarno took over the role in 2023, following Alessandro Michele, and introduced a new creative direction for the brand. However, he is set to step down after just two years, and his successor has yet to be announced.
A Challenging Year for the Luxury Market
The luxury sector faced a difficult year in 2024, with economic uncertainty, rising geopolitical tensions, and a slowdown in luxury consumption in Asian markets all impacting sales. As a result, Kering’s Pinault, LVMH’s Bernard Arnault, and L’Oréal’s Françoise Bettencourt Meyers reportedly lost a combined $70 billion in wealth.
Related Article: The Challenges Faced by the Luxury Industry in 2024: LVMH, LOréal, and Kering Suffer Massive Losses
Meanwhile, LVMH Moët Hennessy Louis Vuitton reported $88.27 billion (€84.68 billion) in full-year revenue for 2024, exceeding market expectations. However, the company’s fashion and leather goods division saw its first sales decline since the pandemic, largely due to weak demand in China, underscoring the overall instability in the luxury sector.
Looking ahead, Kering aims to enhance the desirability of its brands, balance creativity with heritage, and drive sustainable growth. The selection of Gucci’s next creative director and a potential recovery in the Asian luxury market will be key factors in the group’s future performance.
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