Gucci’s Struggles Weigh on Kering as Revenue Drops 12% in 2024
French luxury conglomerate Kering has reported a challenging financial year, with revenue declining by 12% year-over-year (YoY) to €17.2 billion (~$17.7 billion) for the full year ending December 31, 2024. The downturn reflects both reported and comparable basis figures, driven largely by underperformance at Gucci, its flagship brand. Sales from the group’s directly operated retail network, including e-commerce, also fell 13% on a comparable basis.
Financial Performance and Declining Margins
Kering’s cost of sales slightly decreased to €4.5 billion, yet its gross margin contracted to €12.7 billion, down from €14.9 billion in 2023. Net income from continuing operations fell sharply to €1.2 billion (~$1.3 billion), compared to €3.1 billion the previous year. Of this, €1.1 billion was attributable to the group, while minority interests accounted for €94 million.
The company’s operating income dropped to €2.3 billion from €4.6 billion, weighed down by €242 million in non-recurring operating expenses. Meanwhile, financial results worsened, with a loss of €614 million compared to €410 million in 2023.
Gucci Leads Declines While Bottega Veneta Gains Ground
Gucci, Kering’s most valuable brand, faced a significant downturn, with revenue plunging 23% YoY on a reported basis and 21% on a comparable basis, settling at €7.7 billion. Yves Saint Laurent also recorded a decline, with revenue falling by 9% to €2.88 billion from €3.18 billion.
However, Bottega Veneta proved to be a rare bright spot, posting a revenue increase of 4% on a reported basis and 6% on a comparable basis, reaching €1.71 billion. Kering’s Other Houses segment, which includes brands such as Balenciaga and Alexander McQueen, reported an 8% YoY decline on a reported basis and a 7% drop on a comparable basis, with revenue falling to €3.22 billion.
Fourth Quarter Trends
Kering’s revenue continued to decline in Q4 2024, falling 12% both as reported and on a comparable basis. Sales from directly operated retail stores decreased 13%, with a sequential improvement in all regions except Japan. Wholesale and other revenue dropped 10% overall, while wholesale revenue specifically declined 25% across the group’s brands.
With Gucci’s struggles weighing heavily on Kering’s performance, the luxury giant faces an uphill battle to restore growth in 2025. Whether its strategic shifts will yield results remains to be seen, but the company’s future trajectory will likely depend on its ability to reinvigorate its star brand while maintaining momentum in other key segments.
CEO’s Outlook and Future Strategy
Reflecting on the challenging year, Kering chairman and CEO François-Henri Pinault emphasized the company’s commitment to revitalizing its brands.
French luxury conglomerate Kering has reported a challenging financial year, with revenue declining by 12% year-over-year (YoY) to €17.2 billion (~$17.7 billion) for the full year ending December 31, 2024. The downturn reflects both reported and comparable basis figures, driven largely by underperformance at Gucci, its flagship brand. Sales from the group’s directly operated retail network, including e-commerce, also fell 13% on a comparable basis.
Financial Performance and Declining Margins
Kering’s cost of sales slightly decreased to €4.5 billion, yet its gross margin contracted to €12.7 billion, down from €14.9 billion in 2023. Net income from continuing operations fell sharply to €1.2 billion (~$1.3 billion), compared to €3.1 billion the previous year. Of this, €1.1 billion was attributable to the group, while minority interests accounted for €94 million.
The company’s operating income dropped to €2.3 billion from €4.6 billion, weighed down by €242 million in non-recurring operating expenses. Meanwhile, financial results worsened, with a loss of €614 million compared to €410 million in 2023.
Gucci Leads Declines While Bottega Veneta Gains Ground
Gucci, Kering’s most valuable brand, faced a significant downturn, with revenue plunging 23% YoY on a reported basis and 21% on a comparable basis, settling at €7.7 billion. Yves Saint Laurent also recorded a decline, with revenue falling by 9% to €2.88 billion from €3.18 billion.
However, Bottega Veneta proved to be a rare bright spot, posting a revenue increase of 4% on a reported basis and 6% on a comparable basis, reaching €1.71 billion. Kering’s Other Houses segment, which includes brands such as Balenciaga and Alexander McQueen, reported an 8% YoY decline on a reported basis and a 7% drop on a comparable basis, with revenue falling to €3.22 billion.
Fourth Quarter Trends
Kering’s revenue continued to decline in Q4 2024, falling 12% both as reported and on a comparable basis. Sales from directly operated retail stores decreased 13%, with a sequential improvement in all regions except Japan. Wholesale and other revenue dropped 10% overall, while wholesale revenue specifically declined 25% across the group’s brands.
With Gucci’s struggles weighing heavily on Kering’s performance, the luxury giant faces an uphill battle to restore growth in 2025. Whether its strategic shifts will yield results remains to be seen, but the company’s future trajectory will likely depend on its ability to reinvigorate its star brand while maintaining momentum in other key segments.
CEO’s Outlook and Future Strategy
Reflecting on the challenging year, Kering chairman and CEO François-Henri Pinault emphasized the company’s commitment to revitalizing its brands.
“In a difficult year, we accelerated the transformation of several of our houses and moved determinedly to strengthen the health and desirability of our brands for the long term. Across the group, and at Gucci first and foremost, we made critical decisions to raise the impact of our communications, sharpen our product strategies, and heighten the quality of our distribution, all in the respect of the creative heritage that distinguishes our brands. We secured our organisation, made key hirings, sped up execution, and intensified the efficiency of our operations. Our efforts must remain sustained, and we are confident that we have driven Kering to a point of stabilisation, from which we will gradually resume our growth trajectory,” Pinault said.
Gucci’s Metaverse Missteps: Hype Without Lasting Impact
Gucci’s ventures into the metaverse have struggled to deliver sustained engagement, revealing the challenges of luxury branding in virtual spaces. One of its earliest experiments, Gucci Garden on Roblox (2021), aimed to recreate the brand’s Florence-based exhibition as an immersive digital experience. While it initially attracted attention, the activation was temporary and lacked deeper interactivity, leaving many users underwhelmed. The resale market for limited-edition virtual Gucci items also saw drastic fluctuations, with prices skyrocketing and then quickly plummeting, highlighting the speculative nature of digital fashion assets.
In The Sandbox, Gucci launched Gucci Vault Land (2022), an interactive space featuring NFT wearables and gamified experiences tied to its archival collections. Despite leveraging blockchain technology, the initiative struggled to maintain long-term user engagement, as players saw little incentive beyond brand storytelling. Gucci’s broader NFT collaborations, including its work with Superplastic and virtual real estate acquisitions, also failed to establish a meaningful connection between Web3 experimentation and its core luxury audience.
Most recently, Gucci partnered with Apple’s Vision Pro, unveiling an immersive digital experience aimed at integrating luxury fashion with spatial computing. While positioned as a groundbreaking move in mixed reality, early reactions suggested that the experience was more of a conceptual showcase rather than a functional or widely accessible application. Without a clear strategy for consumer adoption, the Vision Pro activation risks becoming another high-profile experiment that generates initial buzz but lacks real impact.
While Gucci positioned itself as a pioneer in digital fashion, its metaverse initiatives often felt more like temporary marketing stunts than long-term brand extensions. The brand’s struggles illustrate a larger issue in luxury’s transition to Web3—without a clear utility or sustained community engagement, even the most prestigious names can lose relevance in the fast-evolving digital landscape.
In The Sandbox, Gucci launched Gucci Vault Land (2022), an interactive space featuring NFT wearables and gamified experiences tied to its archival collections. Despite leveraging blockchain technology, the initiative struggled to maintain long-term user engagement, as players saw little incentive beyond brand storytelling. Gucci’s broader NFT collaborations, including its work with Superplastic and virtual real estate acquisitions, also failed to establish a meaningful connection between Web3 experimentation and its core luxury audience.
Most recently, Gucci partnered with Apple’s Vision Pro, unveiling an immersive digital experience aimed at integrating luxury fashion with spatial computing. While positioned as a groundbreaking move in mixed reality, early reactions suggested that the experience was more of a conceptual showcase rather than a functional or widely accessible application. Without a clear strategy for consumer adoption, the Vision Pro activation risks becoming another high-profile experiment that generates initial buzz but lacks real impact.
While Gucci positioned itself as a pioneer in digital fashion, its metaverse initiatives often felt more like temporary marketing stunts than long-term brand extensions. The brand’s struggles illustrate a larger issue in luxury’s transition to Web3—without a clear utility or sustained community engagement, even the most prestigious names can lose relevance in the fast-evolving digital landscape.