Kering Reports 16% Revenue Drop Amid Gucci’s Struggling Sales In First Half Of 2021
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Kering, the renowned French luxury merchandise corporation, has disclosed a significant sales drop for the initial half of the year. The company’s performance continues to be impacted negatively owing to a consistent decline in sales from Gucci.
Semi-Annual Performance Analysis
During the six months ending on 30th June, the conglomerate experienced a 16% fall in revenue, descending to EUR 7.6 billion (equivalent to US$ 8.7 billion). This figure incorporates a 14% decrease in the first quarter and an 18% fall in the second.
The primary contributor to this downward trend is Gucci, with a substantial 26% reduction in sales. Other luxury houses also saw drops in their performance, including Yves Saint Laurent with an 11% decrease, and other associated houses posting a 15% decline.
However, it was not all gloomy for Kering. Bottega Veneta reported a 1% increase in sales, while the Kering Eyewear and Corporate segment, inclusive of Kering Beaute, witnessed a growth of 2%.
Geographical Sales Trends
Despite the overall downturn, Kering reported a minor upward trend in sales for Asia-Pacific and North America during the second quarter. In contrast, Western Europe and Japan saw an acceleration in their sales decline, largely attributed to a significant drop in tourism.
Chairman and CEO Francois-Henri Pinault, while acknowledging the challenging market conditions, emphasized the company’s commitment to streamlining distribution and controlling costs. He pointed out the decisive steps taken to fortify the company’s financial structure.
Financial Indicators
In terms of net income attributed to the company, the figures stood at EUR 474 million, a significant decrease from the EUR 878 million reported in the same period the previous year.
Despite the lower than expected numbers, Pinault expressed optimism for the company’s future. He believes that the strategic efforts undertaken by the company over the past two years have laid a robust foundation for the next phase of Kering’s growth and development.
Questions & Answers
What was Kering’s reported revenue for the first half of the year?
Kering reported a revenue of EUR 7.6 billion (US$ 8.7 billion) for the first half of the year, representing a 16% decrease compared to the corresponding period last year.
Which brands under Kering experienced a decline in sales?
Gucci was the primary underperformer with a sales drop of 26%. Yves Saint Laurent and other associated brands also experienced declines in sales, with decreases of 11% and 15% respectively.
What were the key contributing factors to the sales decline?
The sales decline was primarily attributed to reduced tourism, impacting sales in Western Europe and Japan. Additionally, specific brands like Gucci significantly underperformed.