The China Mail - Gucci owner Kering's annual profit plunges

Its share price, however, jumped on the Paris stock market as the company's results for the last three months of the year were not as bad as feared by analysts.

The French luxury group, whose other brands include Yves Saint Laurent, Bottega Veneta and Balenciaga, said its net profit fell 62 percent to 1.13 billion euros ($1.16 billion) last year compared with 2023.

Sales retreated 12 percent to 17.2 billion euros. They fell by 23 percent at its Italian brand Gucci alone to 7.65 billion euros.

"We have demonstrated in the past that we know how to grow brands, and we will do it again," Kering chief executive Francois-Henri Pinault said at a results presentation.

"Gucci will come back. I have absolutely no doubts about this," he said.

Gucci parted ways with its creative director, Italian designer Sabato De Sarno, last week after a collaboration that lasted two years and failed to turn things around at the fashion label known for its handbags with the double G logo.

Pinault said that by "focusing on what we can control, we've made the necessary decisions to improve our situation, to gradually restore the health of Gucci".

- Not so bad -

Kering's operating margin -- the percentage of revenue retained as profit after covering operating expenses, excluding tax and interest -- stood at 14.9 percent in 2024, down from 24.3 percent in 2023.

In the fourth quarter, group sales totalled 4.4 billion euros, down 12 percent from the same period in 2023, despite improvements in key markets China and the United States, said chief financial office Armelle Poulou.

Gucci sales sank 24 percent to two billion euros in the last three months of 2024.

But Kering shares rose around five percent to 256 euros as its fourth-quarter earnings were better than expected by analysts.

"We are for sure still far from where we want to be," Pinault said.

"But we are confident that we have reached an inflection point and that after a year of stabilisation in 2025, we will gradually resume a trajectory of steady and increasingly profitable growth."

Gucci enjoyed high-flying growth between 2015 and 2019, with revenue rising threefold over that period. Its sales topped 10 billion euros in 2022 under the direction of designer Alessandro Michele.

But Gucci sales declined six percent in 2023, a massive blow to Kering as the brand accounted for almost half of its revenue and two-thirds of its operating profit.

A global slowdown in the luxury sector in 2024 exacerbated Gucci's challenges.

In October, Kering promoted Stefano Cantino, a former Louis Vuitton director, to the post of chief executive at Gucci to replace Jean-Francois Palus. Cantino had been named deputy to Palus just six months earlier.

In another leadership shuffle, Gucci announced the departure of creative director de Sarno last week.

De Sarno was appointed to the job in January 2023, bringing in a more minimalist style to the flashy Florence-based brand after he replaced Alessandro Michele.

A successor has yet to be named.

O.Tse--ThChM