According to Louise Deglise-Favre, an apparel analyst at GlobalData, many of Kering's brands are currently struggling to find their position within the market, as they are too expensive for aspirational shoppers, yet not expensive enough to capture the attention of the ultra-wealthy.
Besides this, she noted that its main brand Gucci is still in the middle of a "huge turnaround in identity" with a necessary yet profound change in aesthetic under new creative director Sabato de Sarno.
Kering announced revenues of €9.02 billion ($9.79bn) for the first half of 2024, an 11% decline compared to the same period in 2023, citing a "slowing market" in most regions except Japan.
Key figures from the first half of 2024
- Revenue decreased 11% from €10.14bn to €9.02bn
- EBITDA was down 28% to €2.60bn
- Recurring operating income decreased by almost half from last year's €2.74bn to €1.58bn
- Net income attributed to the group fell 51% from €1,785m to €878m
Luxury market slowdown hits LVMH, Kering
Deglise-Favre noted that luxury investors were anxiously awaiting LVMH and Kering's Q2 FY2024 results, following a "significant slowdown in Q1."
She explained: "Despite its initial resilience, the luxury market is finally suffering from the impacts of lasting inflation in Europe and the US which is dampening spend among aspirational shoppers, as well as the economic downturn in China, especially with the crash of the real estate market heavily affecting the middle class."
She warned that in this delicate climate, strong brand equity will be crucial for luxury brands throughout 2024. Only those appealing to the ultra-wealthy or with superior fashion credentials are likely to thrive.
Citing Hermès as an example, which reported 13% revenue growth in Q1, she highlighted its continued outperformance due to its "status-signifying" leather items in the highest echelons of society.
Moreover, she shared that brands like Miu Miu and Loewe are also expected to triumph, thanks to their highly desirable designs and ability to consistently stay ahead of trends.
Recently, Kering achieved recognition on the A-list released by the global environmental disclosure nonprofit Carbon Disclosure Project (CDP) for its exceptional data disclosures.
