Paris (France) (AFP) – French luxury group Kering saw sales slide by six percent in the first quarter of this year, with its troubled flagship Gucci fashion house still dragging down its performance. The group, which embarked on a deep restructuring effort with the hiring of CEO Luca de Meo last year, plans to unveil a roadmap to turning around its performance to investors on Thursday.
The six-percent drop in sales to 3.57 billion euros ($4.21 billion) was comparable to that suffered by rival LVMH, the world’s largest luxury group. Sales were flat on a like-for-like basis that strips out exchange rate fluctuations and changes in the business. “Group revenue stabilized, marking an important first step in our recovery and a further sequential improvement,” said de Meo in comments on the first quarter.
Sales by Gucci fell by 14 percent to 1.35 billion euros. The drop was eight percent on a like-for-like basis, which constitutes an improvement from previous quarters. “Gucci remains our top priority,” said de Meo, who previously helped turn around the fortunes of French carmaker Renault. “A comprehensive turnaround is underway, with decisive actions across client, distribution and, above all, the offer,” he added.
Kering has struggled to turn things around at Gucci, its flagship Italian fashion house famous for its handbags. Last March, it wooed Georgian designer Demna to take over as artistic director. Gucci is Kering’s main money-spinner, until recently accounting for almost half of revenues and two-thirds of operating profit. The group no longer provides a breakdown of sales by its other fashion brands that include Saint Laurent, Bottega Veneta, Balenciaga, McQueen, and Brioni. Overall, that division saw sales fall by nine percent to 2.85 billion euros, or by three percent on a like-for-like basis.
The much smaller jewellery and eyewear divisions both saw sales rise in the first quarter. Kering said revenue in the Middle East fell by 11 percent in the first quarter after having posted growth in the first two months. After initial disruptions due to the war launched by the United States and Israel on Iran, the company said its retail network is back in operation. The group reiterated its objective to return to growth in 2026. Last year, sales fell 13 percent to 14.7 billion euros, with net profits tumbling to 532 million euros.
© 2024 AFP
