Home Business News French luxury goods company Kering is having difficulty with their ‘main source of income’

French luxury goods company Kering is having difficulty with their ‘main source of income’

25th Apr 24 1:15 pm

Kering who is a French-based multinational corporation which specialises in luxury goods and owns the brands Gucci, Balenciaga, Bottega Veneta, Yves Saint Laurent, Creed and Alexander McQueen.

Kering is having difficulty renewing Gucci, its main source of income.

The company is making changes to improve Gucci’s luxury image, but these changes are taking longer than expected.

As a result, Kering’s profits will likely be much lower this year than analysts had forecast for this year.

Kering’s earnings per share in 2024 could decline by up to 30%, compared to a previous forecast of a 14% decline.

  • Changes at Gucci include a new creative designer and less wholesale.
  • The company is investing heavily in revamping Gucci through marketing, new designs and store renovations. This is putting pressure on margins in the short term.
  • The weaker Chinese market is also affecting Gucci’s sales. Asia continues to be its main market with 32% of sales
  • Gucci’s new collections are expected to go on sale in the third quarter of 2024, but sales may not recover until 2025.

Overall, Kering is in a transition period. The success of its restructuring strategy, especially for Gucci, will determine the company’s future performance. The shares of the French company have opened with a drop of more than 7% and since the beginning of the year they have accumulated a drop of 19%.

The luxury sector has performed very well in recent years, one of the main strengths is the stability in demand, since its consumers have a high purchasing power and can afford to continue making purchases in times of crisis. In addition, luxury-related products have a component of brand loyalty that contributes to greater stabilization in sales.

This type of company works with profit margins much higher than the sector average, which allows them to better withstand periods of inflation.

The exclusivity and high quality of their products also allows them to raise prices without altering demand. Finally, they focus their investment on innovation, new product creativity and collaborations to maintain consumer interest. All these factors have already been discounted, investors expected a greater recovery in sales in China, which continue to be conditioned by the weakness of its economy.

Leave a Comment

You may also like


Sign up to our daily news alerts

[ms-form id=1]