Dive Brief:
- Kering reported fiscal 2023 revenue of 19.6 billion euros, or approximately $21.1 billion at current exchange rates, representing a 4% year-over-year decrease compared to 2022 numbers, according to a Thursday press release.
- Revenue was down year-over-year for fiscal 2023 at all of the company’s fashion houses, with Gucci dropping 6% to 9.9 billion euros, Yves Saint Laurent down 4% to 3.2 billion euros and Bottega Veneta dipping 5% to 1.6 billion euros. The company’s other houses, which include Alexander McQueen, Balenciaga and Brioni, declined 9% to 3.5 billion combined.
- Kering Eyewear saw record-setting revenue for the year at 1.5 billion euros, representing a 35% increase, which the company said was due in part to the consolidation of its Maui Jim brand, which Kering acquired in 2022.
Dive Insight:
The luxury market slowdown in 2023 hit Kering hard, especially compared to its primary rival in the space, LVMH Moët Hennessy Louis Vuitton, which last month reported a fiscal 2023 revenue increase of 9% and record net profits for the year.
“In a trying year for the group, we strengthened our organization and took significant steps to further enhance the visibility and exclusivity of our Houses,” François-Henri Pinault, chairman and CEO, said in the release. He added that Kering is focused on revitalizing Gucci and expanding its share in the beauty market with the launch of Kering Beauté and the acquisition of fragrance brand Creed. “In a market environment that remains uncertain in early 2024, our continuing investments in our Houses will put pressure on our results in the short term,” Pinault said.
For Q4, Kering reported that all its fashion houses saw revenue dips of 8%, which was a smaller percentage decline than Q3’s double-digit dips, but not enough to boost overall company revenue.
The company has suffered from a faltering desirability of its brands, and the revenue losses highlighted Kering’s diminished appeal, said Pippa Stephens, senior apparel analyst at GlobalData. She said that historically, Gucci was “the sole drag on Kering’s performance, with Saint Laurent and Bottega Veneta achieving strong growth,” but there was less disparity across the company’s fashion portfolio, “proving the wider luxury slowdown.”
Stephens added that the upcoming debut collection of Gucci’s new creative director, Sabato de Sarno, would be watched closely to see if it’s able to generate “stronger consumer demand, thanks to his more minimalist designs, which give Gucci broader appeal compared with its former bold aesthetic.”
Seán McGirr was named creative director at Alexander McQueen, replacing Sarah Burton, and his first collection for the brand will debut in March. That may help bring fresh appeal to that house as well, said Stephens.
Meanwhile, wholesale was the biggest bottom line drag at Saint Laurent, Bottega Veneta and the company’s other fashion houses, all of which saw double-digit drops.
Kering saw significant changes in 2023, such as the acquisition of a 30% stake in Valentino and several executive changes, including the July 2023 appointment of Armelle Poulou as CFO and the departure of Gucci president and CEO Marco Bizzarri. Last month, Kering acquired a 115,000-square-foot building at the southeast corner of 56th Street and Fifth Avenue in New York for 885 million euros.
Looking ahead to 2024, the company projected “a decline compared to the level reported in 2023, particularly in the first half of the year.”
