Kering's Struggles Deepen with Gucci Sales Plunge

Kering reported an unexpected 11% drop in second-quarter sales, with flagship brand Gucci taking a severe hit. Despite new designs by Sabato de Sarno, Gucci's sales fell 19%. Forecasts predict a weak second half, affected by a global luxury market downturn and declining high-end spending.

Kering reported a significant and unexpected 11% drop in second-quarter sales, sparking concerns about the luxury conglomerate’s future. The French company, which owns high-profile brands like Gucci, Boucheron, and Balenciaga, saw sales plummet to 4.5 billion euros ($4.9 billion).

Analysts had predicted a 9% decline, making the actual figures even more disconcerting. Operating income for the second half of the year is also expected to fall by around 30%, following a concerning 42% drop in the first half. Gucci, Kering’s flagship brand, experienced a 19% drop in sales, underperforming analyst expectations.

Efforts to revive Gucci, including minimalist designs by new creative director Sabato de Sarno, face obstacles from a struggling global luxury market and economic troubles in China. These issues are compounded by slowing momentum in Western markets post-pandemic, causing Kering shares to hit their lowest since 2017.