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Kering Says Investments May Hit Margins as Gucci Sales Decline

(FILES) A photo taken on June 18, 2013 shows the new name and logo of French luxury and retail group PPR , Kering. (Photo by FRANCOIS GUILLOT / AFP)
(FILES) A photo taken on June 18, 2013 shows the new name and logo of French luxury and retail group PPR , Kering. (Photo by FRANCOIS GUILLOT / AFP)
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Kering Says Investments May Hit Margins as Gucci Sales Decline

(FILES) A photo taken on June 18, 2013 shows the new name and logo of French luxury and retail group PPR , Kering. (Photo by FRANCOIS GUILLOT / AFP)
(FILES) A photo taken on June 18, 2013 shows the new name and logo of French luxury and retail group PPR , Kering. (Photo by FRANCOIS GUILLOT / AFP)

Kering posted a 4% decline in fourth quarter sales, hit by slowing demand for fashion as it seeks to turn around its top brand Gucci, and cautioned that investments in its labels could affect margins in 2024.
Sales at the French group, which also owns fashion brands Bottega Veneta and Balenciaga and jeweler Boucheron, fell to 4.97 billion euros ($5.36 billion) in the final three months of the year, despite improvement in the United States and Europe. That was broadly in line with expectations for 4.94 billion euros, according to consensus estimates cited by RBC.
After a post-pandemic splurge that fueled stellar sales growth for high end fashion companies over two years, consumers have been reining back purchases, particularly younger, less wealthy clientele that are more vulnerable to rising inflation.
"We will continue to invest in our brands in the long term -- yes, that means in the coming year our margins will be less supported than in previous years," Kering chief financial officer Armelle Poulou told reporters, according to Reuters.
"We think it’s the good strategy to ensure growth in the long term for our brands," she added.
Kering’s efforts to revive sales at its star label Gucci, which has lagged rivals over the past two years, have been complicated by the slowing demand.
Barclays' analysts project industry-wide growth from high end luxury companies of 5% this year, down from 9% last year and double digit growth the previous two years.
Gucci's performance improved over the fourth quarter, down 4% year-on-year, compared with a 7% decline in the third quarter. The label's recurring operating margin stood at 33.1% for the full year, lower than its level of 35.3% in the first half.
"Gucci is not performing worse than expected which is a relief," said Piral Dadhania, analyst with RBC, noting that the focus would now turn to Gucci's margin outlook.

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80-year-old LL Bean Staple Finds New Audience as Trendy Bag

Gracie Wiener poses with some of her tote bags in Washington Square Park in New York, Wednesday, July 17, 2024, (AP Photo/Pamela Smith)
Gracie Wiener poses with some of her tote bags in Washington Square Park in New York, Wednesday, July 17, 2024, (AP Photo/Pamela Smith)
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80-year-old LL Bean Staple Finds New Audience as Trendy Bag

Gracie Wiener poses with some of her tote bags in Washington Square Park in New York, Wednesday, July 17, 2024, (AP Photo/Pamela Smith)
Gracie Wiener poses with some of her tote bags in Washington Square Park in New York, Wednesday, July 17, 2024, (AP Photo/Pamela Smith)

L.L. Bean created it 80 years ago to haul heavy blocks of ice. Now it's a must-have summer fashion accessory, The Associated Press reported.

The simple, sturdy canvas bag called the Boat and Tote is having an extended moment 80 years after its introduction, thanks to a social media trend in which they're monogrammed with ironic or flashy phrases.

New Yorker Gracie Wiener helped get it started by ordering her humble bags from L.L. Bean monogrammed with “Psycho” and then “Prada,” the pricey Italian luxury brand, instead of just her name or initials, and posting about them on Instagram. Then others began showcasing their own unique bags on TikTok.

Soon, it wasn’t enough to have a bag monogrammed with “Schlepper,” “HOT MESS,” “slayyyy” or “cool mom.” Customers began testing the limits of the human censors in L.L. Bean’s monogram department, which bans profanity “or other objectionable words or phrases,” with more provocative wording like “Bite me,” “Dum Blonde” and “Ambitchous.”

Social media fueled the surge, just as it did for Stanley’s tumblers and Trader Joe’s $2.99 canvas bags, which were once selling on eBay for $200, said Beth Goldstein, an analyst at Circana, which tracks consumer spending and trends.
The tote’s revival came at a time when price-conscious consumers were forgoing expensive handbags, sales of which have weakened, and L.L. Bean’s bag fit the bill as a functional item that’s trendy precisely because it’s not trendy, she said. L.L. Bean's regular bags top out at about $55, though some fancier versions cost upward of $100.
“There’s a trend toward the utilitarian, the simple things and more accessible price points,” she said, and the customization added to the appeal: “Status items don’t have to be designer price points.”

L.L. Bean’s tote was first advertised in a catalog as Bean’s Ice Carrier in 1944 during World War II, when ice chests were common. Then they disappeared before being reintroduced in 1965 as the Boat and Tote.

These days, they’re still made in Maine and are still capable of hauling 500 pounds of ice, but they are far more likely to carry laptops, headphones, groceries, books, beach gear, travel essentials and other common items.

Those snarky, pop-oriented phrases transformed them into a sassy essential and helped them spread beyond Maine, Massachusetts’ Cape Cod and other New England enclaves to places like Los Angeles and New York City, where fashionistas like Gwyneth Paltrow, Reese Witherspoon and Sarah Jessica Parker are toting them — but not necessarily brandished with ironic phrases.

“It’s just one of those things that makes people smile and makes people laugh, and it’s unexpected,” said Wiener, who got it all started with her @ironicboatandtote Instagram page, which she started as a fun side hustle from her job as social media manager for Air Mail, a digital publication launched by former Vanity Fair Editor-in-Chief Graydon Carter.

The folks at L.L. Bean were both stunned and pleased by the continuing growth. For the past two years, the Boat and Tote has been L.L. Bean’s No. 1 contributor to luring in new customers, and sales grew 64% from fiscal years 2021 to 2023, spokesperson Amanda Hannah said.

The surge in popularity is reminiscent of L.L. Bean’s traditional hunting shoe, the iconic staple for trudging through rain and muck, which enjoyed its own moment a few years back, driven by college students.