Luxury group Kering continues to tumble in first half, profit and sales plunge

Kering group, still weighed down by the difficulties of its flagship brand Gucci, announced on Tuesday a 46 percent plunge in its half-year net profit. This fell below 500 million euros. The new chief executive officer, Luca de Meo, is due to take office in mid-September to attempt to turn things around. Kering’s turnover, owner of Yves Saint Laurent, Bottega Veneta and Balenciaga, fell by 16 percent over the six months to 7.6 billion euros.

“While the published results remain well below our potential, we are convinced that the efforts made over the past two years have laid solid foundations for the next stages of Kering’s development,” said chairman and CEO François-Henri Pinault, quoted in the press release.

The culmination of the reorganisation launched months ago to redress the brand and the group, Kering announced in mid-June the arrival of Luca de Meo. De Meo, former boss of car manufacturer Renault, will take on a newly created position of chief executive officer alongside Pinault. Pinault will retain the sole chairmanship. De Meo will take up his duties on 15 September.

The group continues to face “an economic and geopolitical environment that remains uncertain”, the statement acknowledged. However, it displays its “desire to sustainably pursue a path of profitable growth”. Meanwhile, profitability continued to suffer in the first half. The current operating margin fell to 12.8 percent, compared to 17.5 percent a year earlier in the same period.

Kering group’s main problem is that it is failing to revive sales of Gucci, its flagship Italian brand. Gucci alone accounts for nearly 50 percent of the group’s sales and two-thirds of its operating profitability. These sales fell by 26 percent over the six months to three billion euros, compared to more than four billion euros a year earlier. In the second quarter, Gucci saw its sales fall by 27 percent to 1.46 billion euros.

The group’s other brands are not faring any better. Yves Saint Laurent’s sales fell by 11 percent to 1.29 billion euros and those of “other houses”, a section that includes Balenciaga, by 15 percent to 1.46 billion euros. Only the woven handbag brand Bottega Veneta is holding its own, with a very slight one percent increase in sales to 846 million euros, as well as Kering Eyewear, the eyewear and beauty branch (plus two percent to one billion euros).

This article was translated to English using an AI tool.

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