FinancialsOct 16, 2024
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Kering’s Jewelry Brands ‘More Resilient’ Than Other Luxury Goods in Q3
Sales fell 15 percent for the luxury conglomerate in the third quarter, led by a 26 percent drop in sales for flagship brand Gucci.
A model wears pieces from “The Power of Couture,” the 24-piece high jewelry collection Boucheron released in January. Boucheron is part of Kering, and the luxury conglomerate saw sales fall 15 percent in the third quarter.
Paris—Kering said faltering consumer confidence, lower in-store traffic, and a “soft summer” in Western Europe were among the factors impacting sales in the third quarter.
The Paris-headquartered luxury conglomerate reported Wednesday that sales totaled €3.79 billion ($4.21 billion), down 15 percent year-over-year as reported (16 percent on a comparable basis).
Year-to-date, Kering’s sales are down 12 percent both as reported and on a comparable basis.
Sales at the stores Kering owns and operates fell 17 percent year-over-year on a comparable basis, while wholesale and other revenue dropped 12 percent.
Region-wise, sales fell most sharply in Asia-Pacific, impacted by the drop-off in luxury sales in China.
Sales in the region fell 30 percent in Q3 for Kering and were down 15 percent in North America and 11 percent in Western Europe.
Sales increased in Japan (up 3 percent) and other countries (up 2 percent).
North America now accounts for 23 percent of Kering’s total sales, up 1 percent year-over-year.
Earlier this year, Kering appointed a new head of Kering Americas. Ewa Abrams was promoted from general counsel to president of Kering Americas, effective Aug. 1.
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The Paris-headquartered luxury conglomerate reported Wednesday that sales totaled €3.79 billion ($4.21 billion), down 15 percent year-over-year as reported (16 percent on a comparable basis).
Year-to-date, Kering’s sales are down 12 percent both as reported and on a comparable basis.
Sales at the stores Kering owns and operates fell 17 percent year-over-year on a comparable basis, while wholesale and other revenue dropped 12 percent.
Region-wise, sales fell most sharply in Asia-Pacific, impacted by the drop-off in luxury sales in China.
Sales in the region fell 30 percent in Q3 for Kering and were down 15 percent in North America and 11 percent in Western Europe.
Sales increased in Japan (up 3 percent) and other countries (up 2 percent).
North America now accounts for 23 percent of Kering’s total sales, up 1 percent year-over-year.
Earlier this year, Kering appointed a new head of Kering Americas. Ewa Abrams was promoted from general counsel to president of Kering Americas, effective Aug. 1.
Kering owns Pomellato, Dodo, Qeelin, and Boucheron, which opened its first U.S. store in September. The 3,900-square-foot store is located on Madison Avenue.
The brands are part of the company’s Other Houses division, which also includes Alexander McQueen and Brioni.
Sales in Other Houses also dropped 15 percent (14 percent on a comparable basis).
On the company’s earnings call Wednesday, Kering Chief Financial Officer Armelle Poulou said it was a “challenging” quarter for the brands in this division, though its jewelry brands fared better than its fashion brands.
“Our jewelry houses were more resilient, though they were not immune to the overall trend [of a slowdown in sales,]” she said.
Among all Kering’s divisions, Gucci posted the steepest decline in sales in the third quarter. Sales for the Italian fashion house dropped 26 percent as reported (25 percent on a comparable basis.)
Sales declined 13 percent as reported (12 percent on a comparable basis) for Saint Laurent.
Bottega Veneta’s sales increased 4 percent (5 percent on a comparable basis), with sales particularly strong in the United States, Kering said.
Known mainly for its bag and its shoes, the Italian brand has a pair of drop earrings that sell out consistently, aided by their popularity among celebrities and influencers.
Harper’s Bazaar U.K. recently described the earrings as a “modern icon.”
Kering’s eyewear division also had a positive quarter, with sales up 4 percent on both a reported and comparable basis.
In reporting its third-quarter results, Kering warned that the larger-than-expected slowdown in sales in Q3 and the “major uncertainties” likely to impact demand among luxury consumers in the coming months could result in a nearly 50 percent decline in operating income.
The company projects its 2024 operating income could total €2.5 billion ($2.7 billion), down from €4.75 billion ($5.13 billion) in 2023.
“With discipline and determination, we are executing a far-reaching transformation of the group, and at Gucci in particular, at a time when the whole luxury sector faces unfavorable market conditions,” Kering Chairman and CEO François-Henri Pinault said in a press release.
“This severely impacts our performances in the short term. Our absolute priority is to build the conditions for a return to sound, sustainable growth, while further tightening control over our costs and the selectivity of our investments.”
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