Slack in Gucci, Yves Saint Laurent, Bottega Veneta weighs down Kering’s 2023 revenue, profits

February 8, 2024

Kering has seen sales at Gucci slow down after the departure of star creative director Alessandro Michele. Seen: Gucci fashion jewelry campaign. Image: Gucci

By Luxury Marketer Intelligence

Revenue at Gucci owner Kering totaled $21.1 billion (€19.6 billion) in 2023, a decrease of 4 percent as reported, including significant impacts from changes in exchange rates and the scope of consolidation (-4 percent and +2 percent, respectively) and down 2 percent on a comparable basis.

Recurring operating income amounted to $5.06 billion (€4.7 billion) in 2023, down 15 percent from the 2022 level. Recurring operating margin was 24.3 percent in 2023 versus 27.5 percent in 2022. 2023 net income attributable to the group amounted to $3.28 billion (€3 billion).

“In a trying year for the group, we strengthened our organization and took significant steps to further enhance the visibility and exclusivity of our houses,” Kering chairman/CEO François-Henri Pinault said in a statement.

“We are focused on revitalizing Gucci, leveraging the unique blend of craftsmanship, Italian heritage and modernity that characterizes this iconic house,” he said.

“The launch of Kering Beauté and the acquisition of Creed, a storied maker of high-end fragrances, will enable us to capture our share of the steadily growing beauty market.

“In a market environment that remains uncertain in early 2024, our continuing investments in our houses will put pressure on our results in the short term. Thanks to the experience gained across the group through a decade of outstanding expansion, we are confident in achieving our long-term ambitions.”

The numbers put Kering behind competitors LVMH, Richemont and Hermès in their 2023 revenue and profit results.

Here, in Kering's words, are the numbers behind the group's brand performance in 2023:

Channel energy
Sales from Kering’s directly operated retail network, including ecommerce, were stable on a comparable basis.

Wholesale and other revenue fell 11 percent on a comparable basis, as the group further strengthened the exclusivity of its houses’ distribution.

In the fourth quarter of 2023, revenue was down 6 percent as reported and down 4 percent on a comparable basis.

Sales from the directly operated retail network dropped 2 percent on a comparable basis.

Revenue grew in Asia-Pacific and Japan.

Trends in Western Europe and North America improved sequentially.

Free cash flow from operations was €2 billion in 2023. Excluding real estate acquisitions and disposals, free cash flow from operations was €3.3 billion.

Gucci horsebit loafer campaign. Image: Gucci

Gucci
Gucci’s 2023 revenue was €9.9 billion, down 6 percent as reported and down 2 percent on a comparable basis.

Sales from the directly operated retail network, which account for 91 percent of revenue, dropped 2 percent on a comparable basis. Wholesale revenue was down 5 percent on a comparable basis.

In the fourth quarter of 2023, Gucci’s revenue decreased 4 percent on a comparable basis. Sales from the directly operated retail network were down 4 percent on a comparable basis, with sequential improvements in North America and Asia-Pacific, as well as in leather goods and women’s ready-to-wear.

Towards the end of the quarter, Gucci reopened its historic store on via Monte Napoleone in Milan. Wholesale revenue was up 3 percent on a comparable basis in the quarter.

Gucci's recurring operating income totaled €3.3 billion in 2023. The recurring operating margin was 33.1 percent, as investments in implementing the house’s strategy weighed on profitability.

Yves Saint Laurent
In 2023, Yves Saint Laurent’s revenue amounted to €3.2 billion, down 4 percent as reported and down 1 percent on a comparable basis.

Sales from the directly operated retail network rose by 4 percent on a comparable basis, while revenue from wholesale, still undergoing rationalization, was down 26 percent on a comparable basis.

In the fourth quarter of 2023, sales were down 5 percent on a comparable basis, while revenue from the directly operated retail network was stable.

Yves Saint Laurent performed well in Asia-Pacific and Japan, while sales in North America and Western Europe declined year-on-year, with trends improving sequentially.

The house opened its largest store worldwide in the fourth quarter, on the Champs Elysées in Paris. Wholesale revenue was down 39 percent in the fourth quarter.

Yves Saint Laurent achieved recurring operating income of nearly €1 billion in 2023, and its recurring operating margin remained above 30 percent.

Bottega Veneta
Bottega Veneta's revenue totaled €1.6 billion in 2023, down 5 percent as reported and down 2 percent on a comparable basis.

Sales from the directly operated retail network rose by 4 percent on a comparable basis, while wholesale revenue fell by 24 percent on a comparable basis, in line with the house’s strategy.

Sales in the fourth quarter of 2023 were down 4 percent on a comparable basis, and up 5 percent in the directly operated retail network, driven by Bottega Veneta’s solid performance in North America and encouraging signs in Asia-Pacific, particularly mainland China.

Wholesale revenue was down 37 percent on a comparable basis.

In 2023, Bottega Veneta achieved recurring operating income of €312 million, yielding a recurring operating margin of 19 percent, reflecting the house’s continuing investments.

Other houses
2023 revenue from Kering’s other brands amounted to €3.5 billion, down 9 percent as reported and down 8 percent on a comparable basis.

On a comparable basis, sales from the directly operated retail network rose by 3 percent, while wholesale revenue was down 29 percent.

In the fourth quarter of 2023, sales from the other houses dropped 5 percent on a comparable basis, while sales from the directly operated retail network were up 4 percent. Wholesale revenue was down 30 percent.

Trends improved significantly for Balenciaga in North America and Western Europe, and the house also delivered a solid performance in Asia-Pacific.

At Alexander McQueen, sales in the directly operated retail network were up fueled by its ready-to-wear collections.

Brioni had another very good quarter.

Kering’s jewelry houses maintained their excellent momentum, with double-digit growth in the fourth quarter, driven by the success of all collections.

The other brands in the group generated recurring operating income of €212 million in 2023, while recurring operating margin fell to 6 percent.

Kering Eyewear and corporate
In 2023, Kering Eyewear’s revenue hit a new record of €1.5 billion (up 35 percent as reported and up 10 percent on a comparable basis), benefiting from the consolidation of Maui Jim and excellent development of the brand portfolio.

In the fourth quarter, sales were up 6 percent on a comparable basis.

Kering Eyewear’s recurring operating income rose sharply to €276 million, reflecting Maui Jim’s contribution and the eyewear division’s newly acquired scale.

Taking into account Kering Beauté and corporate costs, the Kering Eyewear and corporate segment posted a recurring operating loss of €7 million, an improvement from 2022.

Creed’s high level of profitability offset startup costs at Kering Beauté.

Financial performance
In 2023, Kering’s net financial expense totaled €410 million. The effective tax rate on recurring income was 27.4 percent. Net profit attributable to the group was €3 billion.

Earnings per share amounted to €24.40.

Cash flow and financial position
Free cash flow from operations was more than €2 billion in 2023. Excluding real estate acquisitions and disposals, free cash flow from operations was €3.3 billion.

At Dec. 31, Kering’s net debt amounted to €8.5 billion. The increase reflects the acquisitions carried out during the year, including French perfume brand Creed.

Dividend
In its Feb. 7, 2024 meeting, Kering’s board of directors decided to ask shareholders to approve a cash dividend of €14 per share at the Annual General Meeting to be held on April 25 to approve the financial statements for the year ended Dec. 31, 2023.

An interim dividend of €4.50 per share was paid on Jan. 17, 2024. If approved, a final dividend of €9.50 will be paid on May 6, 2024 on positions determined on the evening of May 3, 2024.

The ex-date for the final dividend payment will be the morning of May 2, 2024.

Outlook
To achieve its long-term vision, Kering invests in the development of its houses, so that they continuously strengthen their desirability and the exclusivity of their distribution, strike a perfect balance between creative innovation and timelessness, and achieve the highest standards in terms of quality, sustainability and experience for their customers.

In an environment of ongoing economic and geopolitical uncertainty, Kering will continue to execute on its strategy and vision, in pursuit of two key ambitions: to maintain a trajectory of long-term profitable growth, and to confirm its status as one of the most influential groups in the luxury industry.

In 2024, in a context of ongoing normalization of the sector’s growth, the impact of Kering’s investment strategy will weigh on the group’s full-year recurring operating income (based on the scope of consolidation and exchange rates at Dec. 31, 2023), which should post a decline compared to the level reported in 2023, particularly in the first half of the year.

The group will prioritize expenses and investments supporting the long-term development and growth of its houses, while remaining vigilant and disciplined with regards to its cost structure.

At its Feb. 7, 2024 meeting, Kering’s board of directors, chaired by François-Henri Pinault, approved the consolidated financial statements for 2023. The consolidated financial statements have been audited and are in the process of being certified.

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Slack in Gucci, Yves Saint Laurent, Bottega Veneta weighs down Kering’s 2023 revenue, profits

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