Following yesterday’s release of Kering’s figures for Q1 FY2023 ending 31st of March 2023; Pippa Stephens, apparel analyst at GlobalData, a leading data and analytics company, offers her view: “Kering’s performance continues to be sub-par compared to the rest of the luxury sector, with revenue rising by only 2.4% to €5.1bn in Q1 FY2023, lagging significantly behind its main competitor LVMH, which reported a 16.8% increase in sales for the same period. While Kering saw an improvement on Q4 FY2022, when it declined by 2.3%, its brands have struggled to keep up with consumers’ ever-changing preferences, impeding its momentum. Though retail revenue rose by 4%, wholesale was down 10% as the group continues to cut down its number of distributors. Japan was the group’s best performing region in Q1, with comparable retail revenue up 30% due to the relaxation of tourism restrictions, followed by Western Europe, which grew by 15%. The latter benefitted from an increase in US tourists, taking advantage of the dollar’s strength against the euro, with this contributing towards North America declining 18%. After experiencing an 8% drop in revenue in FY2022, Asia Pacific sales grew 10% in Q1 FY2023, with the lifting of COVID-19 restrictions releasing pent-up demand.
“Kering’s main brand, Gucci, continues to hold the group back, experiencing disappointing reported revenue growth of just 1.0% to reach €2.6bn, with its distinctive aesthetic struggling to resonate with shoppers, though it reported that handbags, travel accessories, and women’s ready-to-wear outperformed. The brand’s new creative director, Sabato De Sarno, who is due to showcase his first collection in September 2023, has a big challenge ahead of him to change Gucci’s fortunes and help it win back customers, though his appointment is promising given his previous success at Valentino. Yves Saint Laurent saw a greater uplift, with sales rising 9.1%, as its more versatile and sophisticated designs have helped it retain greater appeal. Bottega Veneta remained flat on the year, after 15.8% growth in FY2022, suggesting that its designs under new creative director Matthieu Blazy are not proving as impactful among shoppers as those created under his predecessor Daniel Lee.
“The group’s Other Houses division was its weakest link during the quarter, with total sales declining by 9%, driven by a comparable 32% drop in wholesale. This was likely caused by the controversy at Balenciaga following the backlash from its campaign featuring BDSM-inspired teddy bears with children in December 2022, though it reported that trends at the brand were positive, so it has maybe not seen as much of a step back from consumer boycotts as expected. It would still be sensible for the brand to stay under the radar for now though, through fewer large-scale campaigns, to thwart any further unwanted attention.”
