French luxury giant Kering reported a 12% drop in Q4 sales on Tuesday, but its key Gucci label had a worse time of it, although it did flag a slight improvement in all-important markets China and the US.

The conglomerate, which famously axed Gucci designer Sabato de Sarno last week, said sales in the last three months of the year were €4.39 billion.

Gucci is so important because it accounts for nearly half of group sales but also around two-thirds of recurring operating profit. And its Q4 sales were down a painful 24%, worse than the 19% deficit analysts had expected.

Kering’s efforts to turn around Gucci with a less maximalist design approach under De Sarno in the past two years (not exactly minimalist but definitely less OTT than predecessor Alessandro Michele’s style) came to little as it coincided with the global slump in luxury demand.

But while global luxury sales are estimated to have fallen 2% last year, the kind of double-digit figures Kering has turned in suggest bigger problems.

But group chief François-Henri Pinault stayed upbeat and talked of stabilisation and progress to come. 

“In a difficult year, we accelerated the transformation of several of our Houses and moved determinedly to strengthen the health and desirability of our brands for the long term,” he said. 

“Across the group, and at Gucci first and foremost, we made critical decisions to raise the impact of our communications, sharpen our product strategies, and heighten the quality of our distribution, all in the respect of the creative heritage that distinguishes our brands. We secured our organisation, made key hirings, sped up execution, and intensified the efficiency of our operations. Our efforts must remain sustained and we are confident that we have driven Kering to a point of stabilisation, from which we will gradually resume our growth trajectory.”

The numbers

So, let’s look at the details. For the full year, Kering’s revenue amounted to €17.2 billion in 2024, down 12% both reported and on a comparable basis.

Sales from the directly operated retail network, including e-commerce, fell 13% comparable, affected by lower store traffic. 

Wholesale revenue of the Houses was down 22% on a comparable basis, “as they continued to heighten the exclusivity of their distribution”. At group level, Wholesale and Other revenue was down 9% on a comparable basis.

For Q4, as mentioned, revenue was down 12%. Sales from the directly operated retail network decreased 13% on a comparable basis. Trends improved sequentially in all regions, except Japan. Wholesale and Other revenue was down 10% overall on a comparable basis, and Wholesale revenue was down 25% for the Houses.

Recurring operating income fell 46% to €2.6 billion for the year and the recurring operating margin was 14.9% in 2024 versus 24.3% in 2023.

The labels

Gucci’s 2024 revenue fell 23% to €7.7 billion, down 21% on a comparable basis. Sales from the directly operated retail network, accounting for 91% of the total, were down 21% and Wholesale revenue was down 28% (both on a comparable basis).

As we’ve said, Q4 revenue dropped 24% comparable with sales from the directly operated retail network down 21% but “with a slight sequential improvement in North America and Asia-Pacific”. 

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It said “the performance of new Leather Goods lines as well as iconic Gucci lines is highly encouraging”. But Wholesale revenue decreased 53% in Q4, “partly reflecting increased selectivity of distribution partners”.

Annual Gucci recurring operating income was €1.6 billion with the operating margin at 21%, “with lower sales resulting in negative operational leverage, although that was mitigated by major efforts to streamline the cost base”.

Yves Saint Laurent fared better but was still negative. 2024 revenue fell 9% to €2.9 billion both reported and comparable. Sales from the directly operated retail network were down 7% while Wholesale revenue fell 25% comparable.

Q4 sales fell 8% comparable and sales from the directly operated retail network dropped 7% but “posted a notable improvement in North America and Asia-Pacific”. New Leather Goods products and reinterpretations of Yves Saint Laurent’s “iconic handbags were very well received”. Wholesale revenue was down 35% in Q4, “due in part to efforts to streamline that distribution channel”.

Yves Saint Laurent achieved recurring operating income of €593 million in 2024 and its recurring operating margin was 20.6%, “reflecting the House’s investments in its collections, stores and clienteling events”.

Bottega Veneta did much better in the year than both those brands as revenue rose 4% reported and 6% on a comparable basis. Sales from the directly operated retail network rose 10% comparable but Wholesale revenue was down 15% “due to the House’s highly selective approach to partners”.

Q4 sales rose 12% comparable with a 17% increase in the directly operated retail network, “driven by outstanding performances in North America and Western Europe. Trends in Asia-Pacific improved. The House’s leather goods offer remains highly successful, underscoring the immense desirability of the Bottega Veneta brand”. Wholesale revenue was down 10% comparable.

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Recurring operating income was €255 million in 2024, yielding a recurring operating margin of 14.9%, “as the House continued to make significant investments in its communications and store network”.

Revenue from Other Houses fell 8% reported to €3.2 billion and 7% comparable. On a comparable basis, sales from the directly operated retail network were down 4%, while Wholesale revenue was down 17%.

Q4 sales fell 4% comparable. Sales from the directly operated retail network were down 7%, while Wholesale revenue was up 9%. 

“Balenciaga’s leather goods continued to be well received, while sales at Alexander McQueen suffered from its transition currently underway. Brioni achieved double-digit growth. Jewelry Houses continued to make progress, with a particularly healthy performance at Boucheron”.

The recurring operating loss of the Other Houses was €9 million in 2024, “due to negative operational leverage at Couture and Leather Goods Houses”.