Sales at French luxury group Kering (EPA:PRTP) fell 7% in the fourth quarter, dragged lower by a slump in revenues at its biggest brand Gucci as COVID-19 disruptions in China hit its business hard.
Gucci’s revenues fell 14% on a comparable basis to 2.73 billion euros ($2.92 billion) in the last three months of the year, compared with an analyst consensus for an 11% fall. For the whole group, analysts had forecast a slide in comparable sales of 3%.
Finance chief Jean-Marc Duplaix said Gucci’s 2022 performance “did not meet our expectations”, adding the group was confident it could turn around the brand in 2023.
Gucci parted ways with its star designer Alessandro Michele last November and in January announced the appointment of Sabato De Sarno, a relatively unknown designer at rival Valentino, as its new creative director. De Sarno will present his debut collection in September, leading some analysts to say it will take time before he can make his mark on the brand.
After stellar growth in 2015-2019, Gucci – which accounts for the bulk of sales and profits at Kering – lost momentum in recent years, lagging behind rivals like Louis Vuitton and Hermes.
Gucci’s recurring operating income was flat at 3.73 billion for the whole of 2022, while that of fellow Kering brand Yves Saint Laurent jumped 43% to top 1 billion euros.
Duplaix said the beginning of the year had been “very encouraging” in China after travel restrictions were lifted towards the end of 2022, sparking hopes in the industry of a sharp rebound in sales.