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Kering Reports Significant Revenue Decline in First Half of 2024

The luxury fashion conglomerate Kering, renowned for its ownership of prestigious brands such as Gucci, Yves Saint Laurent, and Bottega Veneta, has announced a substantial downturn in revenue for the first half of 2024. This news has led to a decline in the company’s stock, which was noted to have dropped as much as 9% during early trading hours on Thursday.

As of 8:30 a.m. London time, Kering’s shares were down 6.47%, representing a retreat to levels not observed since August 2017. The decrease in stock value followed the company’s announcement that revenue fell by 11% year-on-year, reflecting broader challenges in the luxury market. According to Kering, these challenges were particularly pronounced outside of Japan, where growth stood out amidst a generally slowing global economy.

In its statement, Kering highlighted the “marked deceleration” in sales in key markets such as China, with insufficient improvement reported from North America and Europe. Contrarily, Japan saw a notable gain, with revenue increasing by 22% when excluding currency fluctuations. However, the broader Asian market, excluding Japan, reported a 20% decrease, highlighting the region’s contrasting demand dynamics for luxury goods.

Looking ahead, Kering has issued a cautious outlook, projecting that recurring operating profit could decrease by up to 30% in the latter half of 2024. This projection underscores the ongoing uncertainties impacting consumer demand for luxury products. Furthermore, Kering reported a staggering 42% decline in recurring operating profit for the first half of this year, aligning with earlier forecasts made during the company’s first-quarter reporting.

The results from Kering echo a larger trend seen within the luxury sector, with other prominent companies, including LVMH—the largest luxury group in the world—also highlighting weaker-than-expected sales in recent announcements.

Among Kering’s suite of luxury brands, Gucci experienced the most significant revenue decline in the first half, reporting an 18% drop compared to the same period last year. This decline raises questions about the brand’s positioning and strategy within a rapidly evolving luxury market.

This is a developing story; please check back for updates.

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