The French luxury goods group Kering generated less sales in the third quarter than the market expected.
Like other fashion groups, Kering is suffering from the economic slowdown in the luxury goods industry as the post-pandemic boom wanes. The owner of brands including Gucci and Yves Saint Laurent reported sales of 4.46 billion euros for the three months to the end of September, down 13 percent on a reported basis and 9 percent on a like-for-like basis, adjusted for foreign exchange effects. According to Factset, analysts had expected sales of 4.52 billion euros.
After years of good results boosted by rising demand for luxury goods, the industry is struggling with a global sales decline as customers anticipate inflation and high interest rates. China’s economic woes contributed to the overall slowdown. Before the pandemic, the country was the largest luxury market in the world. However, the Chinese economy is suffering from a prolonged downturn in the real estate sector as well as weak export and consumer demand.
Gucci’s sales fell 7 percent to 2.22 billion euros on a like-for-like basis and adjusted for exchange rates. Yves Saint Laurent posted a 12 percent decline to 768 million euros, while Bottega Veneta’s sales fell 7 percent to 381 million euros. Sales at Kering’s other fashion labels, including Balenciaga and Alexander McQueen, fell 15 percent to 805 million euros
The analysts surveyed by Factset had expected sales of 2.22 billion euros at Gucci, 799.5 million euros at Yves Saint Laurent, 390 million euros at Bottega Veneta and 822.5 million euros at other labels.
“Apart from the challenging macroeconomic conditions and the decline in demand across the luxury industry, the change in our sales performance in the third quarter reflects the impact of our decisions to further elevate our brands and their distribution,” said CEO Francois-Henri Pinault.
Earlier this year, Gucci named Sabato De Sarno as its new creative director to revitalize the Italian brand, and in July Kering announced the departure of Gucci CEO Marco Bizzarri as part of a larger management shake-up, with Jean-Francois Palusste stepping in as interim boss. During the quarter, De Sarno presented his first collection for Gucci. The label continues to contribute the lion’s share of Kering’s consolidated sales.
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PARIS (Dow Jones)
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