Gucci Sales Plunge, Piling Pressure on Kering’s Turnaround
The Italian brand said fourth-quarter sales dropped 24 percent. Owner Kering’s sales fell 12 percent overall as Bottega Veneta accelerated.
Gucci’s sales plunged 24 percent in the fourth-quarter, underscoring the steep decline that has prompted the brand to seek a new creative direction. The exit of creative director Sabato De Sarno was announced last week, and owner Kering is under pressure to name a replacement.
Kering’s sales fell 12 percent, with the decline at Gucci partly offset by an acceleration at Bottega Veneta. The logo-free luxury brand known for its intrecciato bags grew 10 percent. Sales continued to decline at Saint Laurent and Balenciaga, but less dramatically than during the previous quarter. Operating profit fell 46 percent to €2.6 billion, slightly above analyst expectations.
Owner Kering has been hit hard by a global slowdown in luxury demand, which came at the same time as its effort to reposition flagship Gucci’s strategy and aesthetic with a more upscale, timeless focus.
The value of the group’s shares has fallen by 40 percent over the past year. “This was an “annus horribilis” for Kering, that much is reflected in the share price,” analyst Luca Solca wrote in a note to clients.
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