Kering Struggles as Gucci Sales Decline Amidst Luxury Market Downturn

Kering, the French luxury goods group, announced a projected near-halving of its full-year operating income due to a significant decline in third-quarter sales. The group attributes its struggles primarily to decreased demand in China, notably affecting Gucci's sales, prompting an ongoing major overhaul.

On Wednesday, French luxury goods powerhouse Kering revealed a stark outlook for its financial year, expecting its operating income to nearly halve following a larger-than-predicted third-quarter sales drop. The decline has been primarily attributed to decreased demand in China, impacting its flagship brand, Gucci.

The group, which also boasts other high-fashion labels like Saint Laurent and Balenciaga, reported revenues of 3.79 billion euros ($4.08 billion), reflecting a 16% organic decline. Analysts had anticipated an 11% decline, according to a Barclays report, making the latest figures worse than expected. Kering foresees its 2024 operating income to hover around 2.5 billion euros, a sharp reduction from the 4.75 billion euros recorded last year.

Gucci, responsible for a significant portion of Kering's sales and profit, saw a 25% downturn this quarter, exceeding the 21% decline analysts projected. To combat this, Kering is undertaking a comprehensive transformation, focusing heavily on Gucci, under the leadership of Francois Henri Pinault. This includes leadership changes and a revamped design style, aiming to refresh the brand despite challenging luxury market conditions.