Kering, the French group that owns Gucci, Saint Laurent, and Bottega Veneta, posted its third-quarter numbers this week, and Friday was rough. The stock fell about 12% in Paris, with some reports putting the slide closer to 16% at its worst, the company's worst trading day on record.
What's odd is that the headline number wasn't a disaster. Group revenue came in at about €3.35 billion, flat from a year ago and right where analysts expected. The problem is Gucci, which still brings in nearly 40% of the revenue. Its comparable sales fell 6% to about €1.29 billion, and sales in its own stores fell 9%. Fewer people walked through the doors, especially in mainland China and Japan. North America held up best, and wholesale actually jumped, but from a small base.
There were bright spots elsewhere. Saint Laurent and Bottega Veneta grew, jewelry sales rose 11%, and eyewear was up 4%. Balenciaga, though, is still struggling. Kering is also shrinking its footprint. It has closed 105 stores net so far this year and now plans to close at least 125.
CEO Luca de Meo, who arrived to fix things, says bringing Gucci back remains the company's defining priority, and the finance chief called the recovery gradual. A JPMorgan analyst was blunter, saying the work to make Gucci desirable again is still in its early stages.
And it's not just Kering. Hermès just posted its slowest growth since 2020, and luxury stocks across Europe are hurting as oil prices climb and shoppers in China and the US pull back. Gucci is even trying to tweak prices to win back middle-class buyers.
Is this a Gucci problem, or is the whole luxury boom finally running out of steam?