Gucci-owner Kering alerts on profits as earnings tumble

Gucci-owner Kering alerts on profits as earnings tumble

Kering's top label Gucci continued to underperform in the first half of this year
Kering's top label Gucci continued to underperform in the first half of this year. Photo: Charly TRIBALLEAU / AFP/File
Source: AFP

Luxury group Kering said Wednesday that its half-year net profit fell by half and warned operating earnings for the second half of the year would be down around 30 percent.

Revenues slid 11 percent and its flagship brand Gucci continued to underperform, with the company hit like other luxury firms by weakness in the key Chinese market.

"In a challenging market environment, which adds pressure on our top line and profitability, we are working assiduously to create the conditions for a return to growth," chief executive Francois-Henri Pinault said in a statement.

Net profit came in at 878 million euros ($953 million) on revenue of 9.0 billion euros.

Its measure of operating profit from ongoing operations fell 42 percent in the first half, and the company warned the figure could come in around 30 percent lower in the second half of the year "considering the uncertainties weighing on the evolution of demand from luxury consumers".

Read also

Coca-Cola lifts full-year forecast after profits top estimates

Gucci's 18 percent drop in sales far outweighed the seven percent drop by Yves Saint Laurent, while Bottega Veneta managed a three percent gain.

PAY ATTENTION: Share your outstanding story with our editors! Please reach us through info@corp.legit.ng!

It noted a "continuing marked decrease in Asia-Pacific" sales.

The Chinese market has been the main source of growth for luxury firms in recent years, and the recent weakness in the world's second-largest economy has hurt their performances.

Gucci's operating profit plunged by 44 percent, a drop larger than the other two houses, but Kering said this reflected investments to help the brand rebound.

"The group prioritises expenses and initiatives supporting the long-term development and growth of its houses, while pursuing with determination the actions required in the current situation to optimise its cost structure," Kering said.

Source: AFP

Authors:
AFP avatar

AFP AFP text, photo, graphic, audio or video material shall not be published, broadcast, rewritten for broadcast or publication or redistributed directly or indirectly in any medium. AFP news material may not be stored in whole or in part in a computer or otherwise except for personal and non-commercial use. AFP will not be held liable for any delays, inaccuracies, errors or omissions in any AFP news material or in transmission or delivery of all or any part thereof or for any damages whatsoever. As a newswire service, AFP does not obtain releases from subjects, individuals, groups or entities contained in its photographs, videos, graphics or quoted in its texts. Further, no clearance is obtained from the owners of any trademarks or copyrighted materials whose marks and materials are included in AFP material. Therefore you will be solely responsible for obtaining any and all necessary releases from whatever individuals and/or entities necessary for any uses of AFP material.