Kering reported third-quarter sales that fell 9 percent at constant exchange rates as the French luxury group struggled to cope with slowing global demand. The drop in North America was particularly pronounced for the Gucci and Saint Laurent owner, with revenues falling 21 percent in the region. Sales fell 10 percent in Europe and rose 1 percent in Asia excluding Japan.
A post-pandemic boom in luxury sales has been winding down for players across the industry, but Kering is lagging peers. Sales at rival LVMH’s critical fashion and leather goods division, which includes Louis Vuitton and Dior, grew 9 percent in the third quarter. Meanwhile, top-end handbag maker Hermès breezed past analyst expectations Thursday morning, reporting sales up 16 percent.
A series of brand-specific challenges are exacerbating Kering’s situation. Flagship label Gucci is navigating the choppy global market while onboarding a revamped leadership team that includes a new creative director, CEO and marketing chief. Saint Laurent has leaned heavily into selling entry-priced luxury handbags, making it vulnerable to a slowdown among aspirational shoppers. Meanwhile, provocative, ugly-chic Balenciaga is struggling to restore momentum after a devastating scandal last year.
Despite the drop, Kering’s North America business remained 50 percent above pre-pandemic levels, CFO Jean-Marc Duplaix said. Japan offered a bright spot, with sales up 28 percent.
Worldwide, “the visibility we have is quite low and geopolitical concerns are mounting which could impact consumer sentiment,” Duplaix said. Aspirational clients remain “under pressure” in the US, while the macroeconomic environment in China “isn’t helping.”
