Luxury group Kering reported a 9% decline in revenue on a comparable basis in the third quarter, attributing the drop to macroeconomic conditions and its own changes in distribution.
Among the group’s brands, Gucci’s revenue was down 7% on a comparable basis, Yves Saint Laurent’s was down 12%, Bottega Veneta was down 7% and the “other houses” segment was down 15%. Kering Eyewear was up 2% on a comparable basis during the quarter, Kering said in a Tuesday (Oct. 24) press release.
“Beyond the challenging macroeconomic conditions and softening demand across the luxury industry, the change in our revenue performance in the third quarter reflects the impact of our decisions to further elevate our brands and their distribution,” Kering Group Chairman and CEO Francois-Henri Pinault said in the release.
The group reported that revenue from Kering’s directly operated retail network fell 6% on a comparable basis due to lower traffic, while wholesale and other revenue dropped 20% as the group tightened its control over distribution.
Kering’s sales missed analysts’ estimates, Bloomberg reported Tuesday. For example, Gucci’s 7% drop exceeded the 6.2% drop expected by analysts.
The luxury group has been struggling with management and creative changes at Gucci, some brands’ high basis of comparison from last year, changes in wholesale distribution and fallout from an ad campaign scandal at Balenciaga, according to the report.
Rival luxury conglomerate LVMH reported a 9% increase in third-quarter revenue on Oct. 10. Though its sales were up, the firm saw a slowdown in growth from the strong post-pandemic spending. LVMH said it had encountered reduced demand for luxury goods in both the United States and Europe.
In Kering’s Tuesday press release, Pinault said that a series of executive appointments announced in July are expected to improve the group’s results.
“The organization we put in place in July will enable us to strengthen the steering of our houses in the current market environment and to reclaim our positions and influence,” Pinault said. “With the acquisition of Creed completed last week, one of the world’s most distinguished high fragrance houses has joined our family, propelling our ambitions in beauty onto the next stage.”
