<\/p>\n
\n\tPARIS \u2014 One year into its turnaround under chief executive officer Luca de Meo, Kering is banking on creative director renewal to rev up demand amid a challenging global economic environment.<\/p>\n
\n\tBut with vacant designer spots to be filled at Saint Laurent and Alexander McQueen, rumors of another potential change at Balenciaga and questions about customer response to the new Gucci, investors are worried that creative churn will prove more of a challenge than an opportunity.<\/p>\n
\n\tKering\u2019s growth engine stalled in the third quarter, as Gucci struggled to gain speed amid a sector-wide slump in demand in China.<\/p>\n
\n\tThe French luxury group said revenues for the three months ended Sept. 30 remained flat at reported exchange rates, totaling 3.35 billion euros. This represented a decrease of 1 percent in comparable terms, above a consensus forecast for a 1.3 percent organic sales drop.<\/p>\n
\n\tBut Gucci, the group\u2019s star brand and main profit engine, missed expectations, posting a 6 percent drop in sales at constant exchange rates, worse than the 5.4 percent decrease expected by analysts.<\/p>\n
\n\tThis followed a comparatively smaller 2 percent decline in the second quarter, when the group showed progress by posting its first comparable sales increase in three years.<\/p>\n
\n\tIn a conference call on Thursday after the market close, chief financial officer Armelle Poulou was peppered with questions about designer changes, with analysts expressing fears this would delay the group\u2019s nascent recovery.<\/p>\n
\n\tOne of them questioned why Anthony Vaccarello left Saint Laurent earlier this month, when the brand was the only one in the fashion division enjoying positive momentum.<\/p>\n
\t\t\t\t\tAnthony Vaccarello<\/p>\n
\t\t\t\t\t\t\t\t\tGiovanni Giannoni\/WWD<\/p>\n
\n\tPoulou, fielding questions without de Meo for the first time since his arrival last year, said all the recent decisions were a consequence of the strategic plan he laid out at a Capital Markets Day in Florence in the spring.<\/p>\n
\n\t\u201cEach brand is on a specific trajectory, and each situation is very different,\u201d she said.<\/p>\n
\n\t\u201cSaint Laurent is experiencing strong momentum, and we are very happy about it. The change of creative director is opening a new chapter after 10 years of success. It\u2019s also good from time to time to bring a new point of view to the brand,\u201d Poulou argued.<\/p>\n
\n\t\u201cOur priority and our growth levers at Saint Laurent is to develop the day wardrobe, to develop the main line to be more relevant in China and we are very confident that the new creative director, together with the Saint Laurent teams, will be able to contribute to the development of this plan,\u201d she said.<\/p>\n
\n\tAmong the targets he announced in April, de Meo said he plans to double Saint Laurent\u2019s menswear and Asia businesses by 2030.<\/p>\n
\t\tTeam Effort\t<\/p>\n
\n\tPoulou promised Kering would name new designers at Saint Laurent and McQueen \u201cvery shortly,\u201d though she gave no indication when they would present their first collections.<\/p>\n
\n\tThe exit of Se\u00e1n McGirr after three years at McQueen comes amid a substantial retrenchment of the business involving layoffs and store closures. His successor will be tasked with \u201cthe repositioning of the brand with a British tailoring approach with a very bold point of view,\u201d Poulou said.<\/p>\n
\n\tShe declined to comment on speculation of a changing of the guard at Balenciaga, where creative director Pierpaolo Piccioli is plying his couture chops and returning the brand to its roots.<\/p>\n
\t\t\t\t\tCEO Luca de Meo on stage with executives and designers at Kering\u2019s Capital Markets Day in Florence.<\/p>\n
\t\t\t\t\t\t\t\t\tJerome Bonnet\/Courtesy of Kering<\/p>\n
\n\tAsked whether management was satisfied with Demna\u2019s work at Gucci, Poulou emphasized that Kering was putting in place a \u201cmore efficient operating model\u201d around designers to ensure their vision is backed up by the product development, marketing and merchandising teams.<\/p>\n
\n\tIn an exclusive interview with WWD earlier this month, de Meo said his ambition was to \u201cre-engineer\u201d the creative process.<\/p>\n
\n\t\u201cA creative director for me is like a captain, the playmaker of a team. He\u2019s the one that has more talent, that kind of technical ability to solve the game in an unexpected way,\u201d the former Renault Group boss said.<\/p>\n
\n\t\u201cBut without a [support] system around, I believe that we cannot run multibillion, multicategory, multi-geography businesses and ask them to do everything from store layout to marketing.<\/p>\n
\n\t\u201cSo I will try to change the way the studio interacts with the rest of the organization in the spirit of finding a more collaborative way of handling the complexity,\u201d he said.<\/p>\n
\t\tDriving Store Traffic\t<\/p>\n
\n\tBy region, the group posted a mixed performance in the third quarter, with comparable revenues up 2 percent in North America, 4 percent in Japan and 2 percent in the rest of the world, but down 5 percent in Asia-Pacific and 2 percent in Western Europe.<\/p>\n
\n\t\u201cClearly, the performance of the third quarter is not where we want it to be, but beneath the top line, the actions we have taken are becoming increasingly visible,\u201d Poulou said.<\/p>\n
\n\tWhile Kering no longer breaks out the performance of its other fashion houses, organic sales in its fashion and leather goods division were down 3 percent during the three-month period.<\/p>\n
\n\tBy comparison, organic sales at LVMH Mo\u00ebt Hennessy Louis Vuitton\u2019s fashion and leather goods unit fell 5 percent year-over-year, dragged down by the sharp slowdown in Chinese demand.<\/p>\n
\t\t\t\t\tLooks from Gucci\u2019s spring 2026 ready-to-wear collection by Demna.<\/p>\n
\t\t\t\t\t\t\t\t\tAdam Katz Sinding\/WWD<\/p>\n
\n\tGucci suffered from tough comparables, but the main hurdle was weak store traffic in China and the United States. However, there were signs the new collections are resonating with clients.<\/p>\n
\n\t\u201cEven in this environment, in every region, we are pleased to see that we had an improvement of the conversion, an improvement of the average ticket and average unit price and also cross-selling. So, difficult traffic, but once the customer is in the store, good reception with the newness,\u201d Poulou said.<\/p>\n
\n\tCommenting on widely reported price cuts at Gucci, she clarified these were selective and mainly designed to clear out seasonal designs from the era of previous creative director Sabato De Sarno.<\/p>\n
\n\t\u201cIt\u2019s also a way sometimes to bring some clients to store, and actually it was very interesting to see that we did a lot of cross-selling,\u201d she said. \u201cBut for us, the focus is really on recreating a desirable offer with the right pricing architecture and an improved quality perception and both are very important.\u201d<\/p>\n
\n\tPoulou said that while Gucci\u2019s fall 2026 was more fashion-forward, gaining traction among high-end consumers and stoking buzz around the brand, the GucciCore cruise collection arriving in stores in November promises to have broader appeal among an aspirational cohort and to flesh out its ready-to-wear and footwear offering.<\/p>\n
\t\tChina Strategy\t<\/p>\n
\n\tSales were clipped by ongoing store closures, with Kering shuttering 105 units in the first nine months of the year, including 25 Gucci boutiques. As a result, it has increased its goal to 125 net closures in 2026 from 100 previously.<\/p>\n
\n\tThe group plans to increase media investment, strengthen communication and intensify clienteling in the fourth quarter and will unveil a new Gucci store concept on Avenue Montaigne in Paris in November, Poulou said.<\/p>\n
\t\t\t\t\tBoucheron Rain necklace.<\/p>\n
\t\t\t\t\t\t\t\t\tCourtesy of Boucheron<\/p>\n
\n\tIn China, it is devolving more responsibility to local teams.<\/p>\n
\n\t\u201cWe are putting Chinese clients more firmly at the center of our actions, stepping up outreach to top clients, timing major product moments around local occasions and conceiving campaigns in and for China rather than adapting global ones,\u201d Poulou said, revealing the launch of a dedicated content factory in China.<\/p>\n
\n\tThe group continues to see healthy prospects for jewelry, even though comparable growth in the division decelerated to 11 percent in the third quarter from 18 percent in the prior three months, as the slowdown in China dented sales at Qeelin.<\/p>\n
\n\t\u201cWith strong desirability, a growing retail footprint and an increasingly integrated industrial backbone, we are confident in jewelry\u2019s ability to increase its contribution to group revenue over time,\u201d Poulou said, adding that Kering will lay out its key priorities for the business during a Kering Jewelry Day in Paris on Dec. 2.<\/p>\n
\n\tThe Kering sales come on the heels of a disappointing read from Herm\u00e8s International, which earlier on Thursday reported that third-quarter revenues rose 4.3 percent at constant exchange rates, its weakest quarterly growth rate in six years.<\/p>\n
\n\tKering confirmed its objective of improving its recurring operating margin in 2026, though it does not expect an improvement in the second half versus the first half.<\/p>\n
\n\t\u201cWe are clear-eyed about the work still ahead,\u201d Poulou said.<\/p>\n
#Kerings #Creative #Revamp #Faces #Investor #Scrutiny #Global #Challenges<\/p>\n","protected":false},"excerpt":{"rendered":"
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