Gucci owner Kering expects investments in his fashion house and normalization of sales growth across the luxury sector to weigh on profitability this year.
The French luxury goods giant on Thursday reported fourth-quarter sales of 4.97 billion euros ($5.35 billion), compared to expectations of 4.91 billion euros, according to consensus estimates provided by Visible Alpha. reported. In the final quarter, Gucci's sales fell by a reported 8% to 2.53 billion euros.
For 2023 as a whole, the Group reported recurring operating profit of €4.75 billion, down from €5.59 billion in 2022.
Kering expects sales to decline year-on-year in 2024, particularly in the first half.
“While the market environment remains uncertain in early 2024, our continued investment in residential properties will put pressure on our results in the short term,” the luxury conglomerate said.
The company's full-year sales came in at 19.57 billion euros, down from 20.35 billion euros a year earlier, but in line with analysts' expectations of 19.515 billion euros.
Sales for the Gucci brand, the biggest contributor to group revenue, were 9.87 billion euros, down from 10.49 billion euros in 2022, but above analysts' expectations of 9.0 billion euros, according to data from Visible Alpha. It amounted to just over 90 million euros.
The brand has been in the midst of a restructuring process since Sabato de Sarno was appointed creative chief in January 2023. Some analysts said the plan was still in its early stages and it would take time for signs of improvement to emerge.
Operating profit in 2023 fell to 4.63 billion euros from 5.395 billion euros, below analysts' expectations of 4.89 billion euros, according to Visible Alpha consensus.
Analysts had expected net profit to be 3.17 billion euros, but full-year net profit fell to 2.98 billion euros from 3.61 billion euros in 2022, according to data from Visible Alpha.
Kering has proposed a stable dividend of €14.00 per share in 2023.
After a post-pandemic euphoria, the luxury goods industry is facing a slowdown in demand as high interest rates and inflation weigh on consumer spending.
Additionally, economic woes in China, one of the industry's biggest markets, have slowed the recovery of luxury goods companies there more slowly than expected, adding to the industry's decline.
Performance has been mixed so far, with Richemont and Brunello Cucinelli benefiting from a wealthier customer base, while peers such as Hugo Boss and Burberry have had disappointing results.
LVMH Moët Hennessy Louis Vuitton, considered a leader across the industry, said its revenue beat analyst expectations last year and it faces 2024 with confidence, pushing the stock prices of some of its peers lower. encouraged a rise.
Salvatore Ferragamo, which is undergoing a transition plan to strengthen its brand, recorded a decline in sales for the year as a result of slowing demand. In fact, some analysts say companies looking to revitalize their brands may face challenges given the overall slowdown in demand for luxury goods.
French luxury goods group Hermès is scheduled to report its 2023 financial results on Friday.
Email Andrea Figueras at andrea.figueras@wsj.com.
