Dive Brief:
- Luxury conglomerate Kering brought in around $5.6 billion (5.1 million euros) in fiscal 2023’s first quarter, with sales inching up just 1% compared to the year before at Gucci, the company’s largest brand.
- Gucci recorded about $2.9 billion in revenue during the period, with sales boosted by the Italian house’s handbags, travel accessories and women’s ready-to-wear. Meanwhile, Yves Saint Laurent’s revenue increased 9% from the year before to about $891 million, while Bottega Veneta’s revenue was flat at roughly $437 million.
- Kering’s other brands — which include Balenciaga, Alexander McQueen and Brioni — saw sales collectively decline 9% to about $985 million. Although the luxury group saw a small increase in overall sales, its financial results lag the strong growth recently reported by rivals LVMH and Hermès.
Dive Insight:
Kering reported its results as its largest brand undergoes a transformation. Gucci’s former creative director, Alessandro Michele, stepped down in November after eight years in the role.
During his tenure, he morphed the label’s ultra sexy aesthetic to one that featured genderfluid maximalism and clashing fabrics. He also wooed celebrities including Harry Styles and Billie Eilish, who have become brand ambassadors.
Kering named Sabato De Sarno as his replacement in January. De Sarno previously worked at Dolce & Gabbana, Prada, and for the last 13 years, Valentino. He will debut his first collection for Gucci during Milan Fashion Week this September.
Wholesale revenue for Gucci was down 7%, as Kering pivoted toward relying less on these types of accounts. Overall, the company’s wholesale revenue from luxury brands plummeted 21% from the year before, according to its earnings presentation.
In contrast, the company has seen some growth in its directly operated stores. That includes at Yves Saint Laurent, where sales in this channel rose 14% on a comparable basis from the year before. At Bottega Veneta — where Kering is overhauling the directly operated store network by growing its selling space and refurbishing stores — retail revenue jumped 5% from the year before.
“Kering’s performance in the first quarter remained mixed, as we had anticipated,” Kering CEO and chair François-Henri Pinault said in a statement. “As we work to augment the desirability of our brands and raise their profile in key markets, we are encouraged by the gradual improvement in activity month after month during the period.”
Retail revenue, including e-commerce, jumped 30% year over year in Japan and 10% in the Asia Pacific region. Western Europe also saw strong growth, rising 15% from the year before. However, retail revenue fell 18% in North America.
Kering’s first quarter results aren’t nearly as strong as some of its rivals. LVHM’s revenue soared 17% in its first quarter compared to the same period last year, despite softening U.S. demand for the luxury conglomerate’s brands. Meanwhile, Hermès reported a 22% revenue increase during the period, including strong growth in the Americas and Japan.
