Following today’s release of Kering’s figures for FY2022/23; Louise Deglise-Favre, apparel analyst at GlobalData, a leading data and analytics company, offers her view: “Kering’s sales rose 15.3% in FY2022 (+9% on a comparable basis), lagging behind rival LVMH, which saw fashion and leather goods sales grow 25.1% in the same period, due to the lackluster performance of its largest brand Gucci. Kering recorded an impressive performance in its home region Western Europe, with comparable sales rising 36% boosted by an influx of US tourists who benefitted from the euro’s weakness against the dollar. In contrast, the group’s largest region Asia-Pacific struggled, with comparable sales declining 8%, due to the impact of lockdowns in China throughout the year. Kering’s performance in Q4 FY2022 significantly slowed, declining 7% on a comparable basis. Though luxury’s affluent shoppers are generally less impacted by inflation, higher prices are obviously making them more carefully consider the brands they want to purchase from, with LVMH not seeing as much of a slowdown as Kering, so it is vital that Kering addresses its weak spots to protect it in 2023.
“While Kering’s overall performance was impressive, it was quite heterogenous across its various brands. Indeed, Gucci’s comparable sales only grew by a muted 1%, as consumers have grown tired of the brand’s maximalist aesthetic. However, Gucci’s luck might be about to turn, as creative director Alessandro Michele announced his departure from the brand in December 2022, to be replaced by Sabato de Sarno, who previously worked at Valentino under Pierpaolo Piccioli. This change in creative vision will be crucial in Gucci’s future success and will hopefully breath new life and excitement into the brand.
“The group’s other major brands, Saint Laurent and Bottega Veneta, recorded impressive performances in FY2022 with comparable sales rising 23% and 11% respectively, boosted by high brand desirability and soaring popularity of some styles of handbags, such as the Cassette from Bottega Veneta. The group’s “Other Houses” division also rose 16% on a comparable basis, driven by the strength of Balenciaga and Alexander McQueen. However, Balenciaga’s future performance is uncertain following the backlash it received in December 2022 for its campaign featuring BDSM-inspired teddy bears with children, which decimated its already divisive brand image. The brand is still showing at Paris Fashion Week, starting at the end of February, but needs to remain very careful and cautious of causing more controversy with its imagery and product lines going forward, with its Trash Pouch released in August 2022 also not well-received.”
