Gucci Sales Slump Continues as Kering Seeks New Designer

FILE PHOTO: The logo of fashion house Gucci is seen outside a store in Cannes, France, May 16, 2024. REUTERS/Sarah Meyssonnier/File Photo/File Photo

French luxury group Kering reported a 12% drop in fourth quarter sales on Tuesday, dragged lower by its Italian brand Gucci, but flagged a slight improvement in major markets China and the United States.
The French conglomerate, which sacked Gucci designer Sabato de Sarno last week as part of its efforts to revive the label, said sales over the last three months of the year were 4.39 billion euros ($4.52 billion), down 12% on a comparable basis, in line with expectations, according to a Visible Alpha consensus cited by UBS.
Sales at Gucci, which accounts for nearly half of group sales and about two thirds of recurring operating profit, were down 24%, below analyst expectations for a 19% drop as the label's aesthetic overhaul failed to win back shoppers, Reuters reported.
Kering's efforts to turn around Gucci with a new, minimalist design approach from De Sarno, who took up the position two years ago, were complicated by a global slump in luxury demand.
The industry's sales rate is the slowest in years, and consultancy Bain & Company estimated they fell globally 2% last year, weighed down by a property crisis in China - a major market for Gucci.
Finance chief Armelle Poulou told reporters the company saw improvement of sales in mainland China and with Chinese shoppers, as well as the US.
"As far as China is concerned, we saw a sequential improvement in our sales of 6 points between Q3 and Q4, an improvement that we also saw in Chinese nationality," she said.
In a statement Kering CEO Francois-Henri Pinault said the company has reached a "point of stabilization, from which we will gradually resume growth".
Full year recurring income from operations came to 2.6 billion euros, slightly higher than Kering guidance in October for 2.5 billion euros.