PARIS (Reuters) – Kering reported on Tuesday a more marked decline in its turnover than expected in the third quarter, due to the slowdown in demand in the Luxury sector but also to the reorganization of the group.
Over the July-September period, the luxury group, which also owns Yves Saint Laurent, Balenciaga and Bottega, recorded a turnover of 4.46 billion euros, which represents a drop of 9% on a comparable basis. while analysts were counting on a decline of around 6%, according to a consensus shared by Bernstein.
Beyond worsening macroeconomic conditions, the company’s performance reflects Kering’s decision to internalize distribution by reducing wholesale to limit promotions and move its brands upmarket, Jean-Marc said. Duplaix, deputy general manager, to the press.
Rising inflation and economic uncertainty have reduced consumer appetite for luxury after years of strong demand, prompting investors to reduce their exposure to the sector and lower their forecasts.
In July, Kering announced a vast management reshuffle to “fully capture the growth of the global luxury market” and turn around Gucci, which is facing slowing sales.
In Europe and the United States, consumers are reducing their purchases of high-end products, while the sector’s performance in China – a key growth engine – is complicated by record youth unemployment and a housing crisis .
The instability of the economic outlook thus complicates Kering’s efforts to revive sales of Gucci, which still represents almost half of the group’s turnover.
Gucci, very exposed to China, saw its sales fall to 2.22 billion euros in the third quarter, a contraction of 7% on a comparable basis and exchange rates compared to the same period last year.
Kering is therefore doing less well this quarter than its competitors in the sector, notably LVMH which reported a slowdown in its sales which are nevertheless up 9%. Hermès resisted headwinds better, posting sales up 15.6% and better than expected.
(Report by Mimosa Spencer, written by Kate Entringer, edited by Jean-Stéphane Brosse)
Copyright © 2023 Thomson Reuters
I have over 8 years of experience working in the news industry. I have worked as a reporter, editor, and now managing editor at 247 News Agency. I am responsible for the day-to-day operations of the news website and overseeing all of the content that is published. I also write a column for the website, covering mostly market news.
