Kering Faces Steep Decline Amidst Gucci Struggles and Chinese Market Downturn
Kering reported a significant drop in sales for the second quarter and a bleak outlook for the second half of the year. The French luxury group, which owns high-end brands like Gucci, Boucheron, and Balenciaga, saw its sales fall to 4.5 billion euros, with a 25% drop in revenue from Chinese consumers. Analysts predict further declines in operating income.
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Kering reported a sharper-than-expected decline in second-quarter sales, forecasting a weak second half as the French luxury group attempts to revive its flagship Gucci brand amidst lukewarm demand from Chinese consumers. Sales plummeted to 4.5 billion euros, representing an 11% drop on an organic basis, missing analyst predictions.
The group anticipates a 30% drop in operating income for the second half, following a 42% decline in the first half to 1.6 billion euros. Deputy CEO Jean-Marc Duplaix highlighted ongoing negative trends in June and July, although CFO Armelle Poulou noted a gradual revenue improvement, particularly for Gucci.
Kering's shares in New York fell about 8%, and its Paris-listed shares have reached their lowest since 2017. Gucci's sales fell 19% in the quarter as new minimalist designs aimed at wealthy clients failed to offset the impact of a global luxury market downturn and economic challenges in its key Chinese market.
(With inputs from agencies.)