Kering, the luxury fashion group, experienced a 10% drop in its net profit, amounting to €1.785 billion in the first half of the year. The company’s sales, however, saw a modest 2% increase, reaching €10.13 billion compared to the same period last year.
Gucci, one of Kering’s flagship brands, witnessed a 1% decline in sales, totaling €5.12 billion, and a 4% drop in profit from recurring operations, which amounted to €1.81 billion. The brand’s operating margin also fell by 1.2 points to 35.3%, and its gross operating profit (Ebitda) was €2.17 billion, a 2% decrease.
Kering attributes this downturn to significant investments made during the period to stimulate growth, with expenditures outpacing revenues. Moreover, the rationalization of Gucci’s distribution, initiated in 2020 and expected to be nearly complete by the end of 2022, has resulted in a substantial decrease in revenues generated by the wholesale network.
Despite these challenges, Kering remains optimistic about reaching its medium-term target of €15 billion in sales and a 40% operating margin. To achieve this, the company has initiated a comprehensive reorganization following the departure of Gucci’s iconic artistic director, Alessandro Michele, in November.
Marco Bizzarri, who has led Gucci since 2015 and has been instrumental in its revival over the past decade, will be leaving the group on September 23. He will be succeeded by Jean-François Palus, Deputy CEO of Kering and a close associate of François-Henri Pinault, Kering’s CEO.
This change, driven by the urgency of the situation, aims to ensure that the aesthetic relaunch of Gucci is well-coordinated and effective from the outset. Kering’s CEO expressed confidence in Palus’s ability to make the right decisions, given his deep familiarity with Gucci’s organization.
The immediate priority is to restore the company’s performance dynamic by revamping its aesthetics. To avoid a lengthy transition period, an external manager was not considered for the role. Instead, Palus will be supported by Francesca Bellettini, who has been promoted to Deputy CEO of Kering, in charge of the development of the houses, while also retaining her role as CEO of Yves Saint Laurent.
