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A disappointing fourth quarter for Kering, which saw revenue decline by 6% on a reported basis and by 4% on a comparable basis with directly managed retail network revenue falling by 2%, contributed to an overall performance the financial year compared to the previous year. In fact, 2023 revenues fell by 4% (2% on a comparable basis) to 19.6 billion euros. The evolution of profitability was also negative with the recurring operating profit falling by 15% to 4.7 billion for a margin on revenues which fell to 24.3% from 27.5% in 2022. The group’s recurring net profit was result down by 18% to 3.061 billion euros, equal to 24.4 euros per share.
Gucci’s difficulties
Gucci’s revenue locomotive no longer drives the group as it did just a few years ago. Revenues of the Gucci brands fell by 6% to 9.873 billion while the operating profit of the group’s main brand fell by 13% to 3.26 billion. The recurring operating margin was 33.1%, since “investments for the implementation of the brand strategy weighed on profitability” we read in a note.
In the fourth quarter alone, group revenues fell by 6% to 4.967 billion with Gucci -8% to 2.528 billion. In detail, sales of the retail network managed directly by the group decreased by 4% on a comparable basis, with trend improvements in North America and Asia-Pacific, as well as in leather goods and women’s ready-to-wear. It should be noted that towards the end of the quarter Gucci reopened its historic store in via Monte Napoleone in Milan. Wholesale revenues, however, increased by 3% on a comparable basis in the quarter.
The other brands
In the full financial year 2023, Yves Saint Laurent’s revenues amounted to 3.2 billion euros, down 4% (-1% on a comparable basis). On a comparable basis, sales of the directly managed retail network increased by 4%, while in the wholesale channel, still in the process of rationalization, they decreased by 26%. In the fourth quarter of 2023 alone, sales fell 5% on a comparable basis (less than estimates of -7%), while revenues from the directly operated retail network remained stable.
Geographically, Yves Saint Laurent performed well in the Asia-Pacific region and Japan, while sales in North America and Western Europe declined year-on-year, with some signs of improvement. In the fourth quarter, the fashion house opened its largest store in the world, on the Champs-Elysées in Paris. Wholesale revenue fell 39% in the fourth quarter. Yves Saint Laurent achieved a recurring operating profit of nearly 1 billion euros in 2023, and its recurring operating margin remained above 30%.