Shares of Kering surged 5.5% on Tuesday after the French luxury goods giant reported better-than-expected fourth-quarter sales, despite a year-on-year decline in revenues.
The stock has had a rough time at the bourses in the past few months. The stock has declined by around 40% in the past year.
The company posted a 12% drop in fourth-quarter sales to €4.39 billion (around $4.52 billion), slightly exceeding the €4.29 billion forecast by analysts.
Kering reported a 62% decline in full-year net profit to €1.13 billion, with operating profit coming in at €2.31 billion, falling short of analysts’ expectations of €2.5 billion. The company proposed a dividend of €6 per share.
The luxury conglomerate, which owns brands such as Yves Saint Laurent, Bottega Veneta, and Balenciaga, announced plans to increase investments to drive growth for its brands while maintaining control over its cost base.
Kering’s Gucci problems
Gucci, Kering’s flagship brand, continued to weigh heavily on the group’s performance, with sales plunging 24% year-on-year to €1.92 billion during the quarter.
The iconic brand accounts for nearly half of Kering’s revenues, underscoring its outsized impact on the group’s overall results.
Full-year sales declined 12% to €17.19 billion, marginally above analyst expectations of €17.09 billion.
Operating income also dropped sharply, falling to €2.55 billion—almost half the €4.75 billion earned the previous year.
Kering’s Chairman and CEO François-Henri Pinault acknowledged the challenging year but expressed optimism about the company’s efforts to stabilize its portfolio.
“In a difficult year, we accelerated the transformation of several of our Houses and moved determinedly to strengthen the health and desirability of our brands for the long term,” he said in a statement.
He further added:
We are confident that we have driven Kering to a point of stabilization, from which we will gradually resume our growth trajectory.
The bright spots in Kerings Q4
Despite broader headwinds, Kering highlighted slight improvements in sales across the Asia-Pacific and North American regions for its key brands, including Gucci, Yves Saint Laurent, and Bottega Veneta.
The results come amid heightened scrutiny of the European luxury sector, which has faced sluggish consumer spending, particularly in China.
Kering’s struggles stand out as Gucci, its star label, has lost favor with consumers.
The downturn follows underwhelming full-year results from rival LVMH, though Cartier-owner Richemont had earlier raised hopes of a sector rebound with stronger earnings.
As part of its revival strategy, Kering recently announced the departure of Gucci design chief Sabato De Sarno, who had been in the role for less than two years. The company stated that his replacement would be named “in due time.”
The change follows the appointment of Gucci CEO Stefano Cantino last year, signaling ongoing efforts to rejuvenate the brand.
While the luxury sector faces continued challenges, Kering’s efforts to reposition its portfolio and stabilize its performance may mark the beginning of a gradual recovery trajectory.
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