Kering Upbeat on Year Ahead Despite Gucci Travails -- Update
15 Februar 2023 - 9:07AM
Dow Jones News
By Joshua Kirby
Kering said Wednesday that it is confident of growth in the year
ahead, despite lower profitability and a fourth-quarter sales
decline at its core brand Gucci.
Fourth-quarter revenue at the French luxury-goods group fell 7%
on a comparable basis to 5.28 billion euros ($5.67 billion), short
of analysts' expectations for EUR5.48 billion, according to a
FactSet-compiled poll.
Gucci, which contributes a majority of group revenue, booked a
14% drop in fourth-quarter sales, Kering said, pointing to the
situation in China, where strict pandemic measures remained in
place in the quarter.
But in other markets including the U.S., Gucci was up against
high comparison bases after a burst of postpandemic growth, finance
chief Jean-Marc Duplaix said in a conference call ahead of the
results.
In contrast, the luxury-fashion division of rival LVMH Moet
Hennessy Louis Vuitton SE booked 10% organic sales growth in the
quarter at its update last month.
For the year as a whole, Gucci booked stagnant sales and
operating profit. The brand's operating margin slipped to 35.6%
from 38.2% the previous year amid high investment aimed at
nurturing future growth, Kering said. The group's overall margin
fell close to one point to 27.5%.
Kering's other-houses division, home to Balenciaga, meanwhile
booked a 4% decline in the year's final quarter; Kering pointed to
a "difficult" December for the brand, which was embroiled in a
controversy over a photoshoot that appeared to include
inappropriately sexual props.
The group's two other largest brands, Yves Saint Laurent and
Bottega Veneta, helped offset this with rising sales in the period,
Kering said.
Despite the challenging end to 2022, Kering said it is confident
of profitable growth in 2023. In China, an end to strict pandemic
measures led to a "very encouraging" start to the year, Mr. Duplaix
said.
The weakness in fourth-quarter revenue was likely expected, and
the focus now will turn to Gucci's turnaround in the coming months,
analysts Piral Dadhania and Richard Chamberlain at RBC Capital
Markets said in a note.
"The key focus will be on the change in creative direction at
Gucci and other strategic changes being implemented at Kering's
most important brand," they said.
The group last month appointed Sabato de Sarno as the new
creative chief at Gucci, filling a vacancy left open since the
departure of Alessandro Michele toward the end of last year. Mr. De
Sarno's debut runway collection will be presented at Milan Women's
Fashion Week in September.
Write to Joshua Kirby at joshua.kirby@wsj.com;
@joshualeokirby
(END) Dow Jones Newswires
February 15, 2023 02:52 ET (07:52 GMT)
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