Gucci’s struggle slows Kering: YSL and Bottega Veneta perform well in 2022

Gucci’s struggle slows Kering: YSL and Bottega Veneta perform well in 2022

Gucci’s struggle in the 4th quarter was public knowledge. The October-December quarter coincided with the departure of Alessandro Michele and the challenging search for a substitute. Analysts expected -11%: Kering’s income statement shows the decrease was equal to 14% on a comparable base. The result caused the group to lose 7% on the same period, a performance -3% worse than forecasted. “Gucci didn’t satisfy our expectations”, stated Kering’s CFO Jean-Marc Duplaix. Yet, he adds that he “continues to trust in the brand’s performance during 2023 and in the long term”. The good news for the French group come from Saint Laurent and Bottega Veneta.

Glass half-empty: Gucci’s struggle

After the stellar growth between 2015 and 2019, Gucci lost some ground in the last few years, falling behind competitors such as Louis Vuitton and Hermès. But it’s also losing ground on the other luxury brands Kering owns. Gucci closed 2022 with a revenue of 10.5 billion euro (+8% at current rates and +1% at constant rates). Operating profits for the latter reached 3.73 billion euro, in line with those of 2021. During the last quarter of 2022, the luxury brand felt the impact of China, where it lost 14% of sales compared to the previous year’s period. “A difficult year”, writes Kering in its press release. Duplaix highlights how Gucci’s efforts are focused on long-term results, adding that the start of the current year has been “very encouraging” in China’s marketplace (according to Reuters).

Glass half-full: healthy brands

The glass half-full for Kering is mainly thanks to Saint Laurent, which “once again closed an exceptional year” with a revenue of 3.3 billion euro (+31%). Operating profits reached 43% of revenue, for more than 1 billion euro. During the 4th quarter of 2022 sales increased 4% on a comparable base. Bottega Veneta also performed well: +16% to 1.74 billion euro in 2022 and +6% on the 4th quarter of the previous year. The “other maison” division, which includes Balenciaga, increased sales by 16% to 3.87 billion for the year. During the 4th quarter of the year, also due to Balenciaga’s difficulties in December, revenue decreased by 4% on a comparable base.

Kering as Louis Vuitton

Overall, Kering’s revenue in 2022 was 20.35 billion euro (more or less that of LVMH’s Louis Vuitton), with an overall 15% growth. The group’s profits were 3.6 billion euro, up 14%.

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