Gucci owner Kering profits slump in a ‘trying year’

PARIS: French luxury giant Kering on Thursday reported a drop in 2023 earnings but vowed to press on with its investment strategy to put flagship brand Gucci “back on track.”

Kering, whose other houses include Yves Saint Laurent, Balenciaga and Bottega Veneta, posted a 17-percent fall in net profit to 2.98 billion euros ($3.2 billion).

Sales retreated 4 percent to 19.57 billion euros during what Chief Executive Francois-Henri Pinault described as a “trying year for the group.”

“Our performance did not meet our expectations, once again,” Pinault said in a call with analysts.

“I have decided, together with our management team, that despite the current uncertain environment, we should not reduce our investments in the future,” he said.

“This will put some pressure on our short-term results, but we are determined to make this short-term pain pay off in the long term,” Pinault added.

Investors showed approval of the plan to focus on Gucci, with shares in Kering closing almost 5 percent higher on the Paris stock exchange.

Kering warned that its investment strategy will weigh on the group’s full-year operating income.

Its earnings statement also cited “ongoing economic and geopolitical uncertainty.”

Shares rise

At Gucci, a brand famous for its leather handbags that account for half of Kering’s revenue, sales dropped 6 percent to 9.9 billion euros last year.

Creations by Gucci’s new creative director Sabato de Sarno, who was appointed in January 2023, will go on sale in the coming weeks, said Kering Chief Financial Officer Armelle Poulou.

Kering also changed Gucci’s management last year, appointing Jean-Francois Palus, deputy chief executive officer and Pinault confidant, to replace Marco Bizzarri, who had led the brand since 2015.

“Our priority is to get Gucci back on track,” Pinault said, warning that this “won’t happen overnight.”

Among other brands, Yves Saint Laurent sales were down 4 percent at 3.18 billion euros last year while Bottega Veneta slumped 5 percent to 1.6 billion euros.

Kering said “trends improved significantly” for Balenciaga in North America and western Europe along with a “solid performance” in Asia-Pacific.

The group’s jewelry houses maintained “excellent momentum, with double-digit growth in the fourth quarter.”

Its eyewear unit, whose brands include Maui Jim, reached a new record 1.5 billion euros in 2023.