Kering's Tough Start in 2024: Gucci's Struggles Lead to Significant Profit Warning

Kering, the powerhouse behind high-fashion brands like Gucci and Saint Laurent, has started 2024 on a shaky note. After issuing a rare profit warning last month, the French luxury group revealed a significant drop in revenues and an even steeper anticipated decline in operating profit for the first half of the year.

In the first quarter, Kering reported an 11% decrease in group revenues, with organic revenues at Gucci down 18% despite efforts to revamp the iconic brand. This downturn has had a ripple effect across other brands within the group, with Saint Laurent and other houses also posting declines. By contrast, Kering’s eyewear and beauty divisions showed some resilience, recording a 9% increase in comparable sales.

The luxury market is facing widespread challenges, particularly from sluggish conditions in China and ongoing geopolitical uncertainties. Kering's competitors, like LVMH, seem to navigate these rough waters better, with some divisions even posting growth.

Amid these trials, Kering is doubling down on its marketing efforts and restructuring plans to rejuvenate Gucci and other underperforming labels. The recent appointment of former Louis Vuitton executive Stefano Cantino as Gucci's deputy CEO underscores the brand's commitment to a robust turnaround strategy.

As Kering navigates this turbulent period, the industry watches closely to see if these bold moves can restore the luster of its top brands. The coming months will be crucial for Kering as it strives to overcome current adversities and reposition itself as a leader in the luxury fashion industry.