Dragged down by the drastic fall of its flagship House Gucci, Kering has confirmed a sharp decline in sales in the first quarter of 2024. The luxury goods group headed by François-Henri Pinault now expects operating income before non-recurring items to fall by between 40% and 45% over the first six months of the year.
Kering’s first-quarter sales fell by 10% on a comparable basis (-11% on a reported basis) to 4.5 billion euros in 2024. This includes a negative currency effect of 3% and a positive perimeter effect of 2%, linked to the consolidation of Creed.
A double whammy: “in view of the deterioration in sales trends”, the group headed by François-Henri Pinault now expects its operating income recurring to fall by between 40% and 45% in the first half of 2024!
“This underperformance is mainly attributable to Gucci, the Group’s flagship brand, whose sales fell by -21% (reported) due to a marked slowdown in China. According to the Group’s CFO, Armelle Poulou, “the market in China is fairly polarized between customers’ desire for the very high-end and the desire for more affordable products”, while in her opinion, “Gucci is positioned in the middle” comments Antoine Fraysse-Soulier, Head of Market Analysis at eToro. He attributes the significant decline in recurring operating income in the first half to “major investments” and the fact that “the Group is going through a period of transition”.
Stock market plunge
The eToro analyst points out that “following these results, the stock ‘fell ’by -4.6% in after-market trading, which would take the share price back to an October 2017 low!”.
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Featured photo: © Gucci