Kering’s value has almost halved in just one year

Kering has had a turbulent 2024, marked by a 40% drop in the value of its shares, an alarming figure, but one that, curiously, is beginning to give way to a timid recovery. The numbers don’t lie: annual revenues of 17.2 billion euros, a 12% drop that makes clear the weight of the storm that has shaken the conglomerate. And, at the heart of it all, the fragility of its flagship, Gucci. Although the fall in the fourth quarter moderated, at 4.39 billion euros, the damage is evident, but signs of hope are emerging between the cracks.

The epicentre of the crisis is Gucci, whose organic fall of 24% in the fourth quarter, and 21% year-on-year, has dragged the brand down to €7.7 billion in revenue. However, Kering has not stopped working on rebuilding its multi-brand channels. A move that halves sales from these outlets, but has the potential to stabilise the brand’s course. The leather goods and handbag collections, especially in North America and Asia-Pacific, have shown signs of revitalisation, while dependence on outlets seems to be under control, representing only 15% of its sales.

Saint Laurent has not emerged unscathed from the blow, with a 9% drop in revenue and a 35% drop in its wholesale channel. However, the brand has maintained its essence, and its leather goods continue to function as a lifeline. Despite the decline, the brand has proven capable of weathering the storm with a recurring operating margin of 20.6%, consolidating its position in an increasingly challenging market.

Bottega Veneta, meanwhile, has been one of the few jewels to shine in the chaos. With 4% revenue growth and a solid 12% increase in the fourth quarter, the brand has shown that exclusivity and craftsmanship remain its most powerful weapons. With a strong presence in North America and Western Europe, Bottega Veneta has managed to stay on its feet, with an operating margin of 14.9% highlighting its strength.

The luxury conglomerate has also seen progress in some of its smaller assets, such as Balenciaga, Alexander McQueen and Boucheron, which together reported €3.2 billion in revenue. Despite the overall 7% drop, Balenciaga has shone in the leather goods segment, while Alexander McQueen, in the midst of a creative transition, still has a long way to go. Jewelry, especially Boucheron, has positioned itself as a strong area, but the group has also suffered a recurring operating loss of €9 million.

One of Kering’s big bets has been the Kering Eyewear division, which has seen its revenues rise by 24% to €1.9 billion. This growth has been key to diversifying the group’s revenue sources, with recurring operating income of €277 million, a clear indication that the brand knows how to shore up its assets beyond traditional luxury.

Overall, Kering has seen a 46% drop in its recurring operating income, totalling €2.55 billion, while the recurring operating margin has fallen to 14.9%, compared to 24.3% the previous year. However, net profit attributable to the group stood at €1.13 billion, with earnings per share of €9.2, a figure that, although positive, does not manage to hide the magnitude of the challenges.

Kering’s crisis is not catastrophic, but recovery will be a dance between restructuring, investment selection and cost optimization. Gucci will have to rebuild its image, while the conglomerate will have to strengthen brands that have shown resilience, such as Bottega Veneta and Kering Eyewear. Kering has the resources and the ability to move forward, but for now, the outlook remains uncertain. The transformation is underway, but the future remains a risky bet.

Sabato de Sarno leaves the creative direction of Gucci.