Kering Shares Plummet Amid Revenue Decline and Weak Forecast
- Kering, the luxury group behind Gucci, reported a significant decline in revenue during the first half of the year, prompting a drop in share prices.
- This slump has raised concerns regarding the company's performance, particularly in the crucial Chinese market.
- The overall sentiment surrounding Kering has become negative as investors react to these disappointing sales figures.
Shares of Kering, the parent company of luxury brands such as Gucci and Yves Saint Laurent, experienced a significant drop on Thursday following the announcement of an 11% revenue decline in the first half of 2024 compared to the previous year. The stock fell as much as 9% at market opening, reaching levels not seen since August 2017, before recovering slightly to a 6.74% decrease by midday in London. The luxury group attributed the revenue decline to a marked slowdown in China, with only a modest performance in North America and Europe. While Japan saw a 22% increase in revenue, the broader Asian market, excluding Japan, suffered a 20% decline. Kering also projected a potential 30% drop in recurring operating profit for the second half of 2024, citing uncertainties affecting luxury consumer demand. Analysts have expressed concern over Kering's performance, with Luca Solca from Bernstein noting a lack of signs indicating a revival for Gucci. He warned that if market reactions do not improve, Kering may need to implement emergency measures to safeguard its financial health. This downturn follows a trend among luxury brands, as LVMH also reported lower-than-expected sales earlier in the week. The challenges facing Kering are compounded by a shift in consumer preferences, particularly a decline in the popularity of streetwear, which had previously been a successful strategy for the brand. The slowdown among middle-class and aspirational consumers presents a "double whammy" for Kering, raising questions about its future direction in the luxury market.