By Mimosa Spencer and Tassilo Hummel
PARIS (Reuters) -Gucci owner Kering, reported on Tuesday a 15% drop in quarterly revenues, falling short of market expectations, with its finance chief flagging further price hikes in the United States to counter tariffs.
Sales in the second quarter totalled 3.7 billion euros ($4.3 billion), down 15% on a comparable basis, missing a Visible Alpha consensus estimate among analysts for a 13% drop cited by UBS. Gucci, which accounts for the bulk of group profits, reported sales of 1.46 billion euros, down 25% year on year.
The French group controlled by the billionaire Pinault family is facing pressure from investors to revive its fortunes after two years of falling sales and reduce its pile of debt.
Kering’s net debt was 9.5 billion euros as of June, down from 10.5 billion at the end of last year largely due to real estate sales. The group also further reduced its store network and now plans to close up to a net 80 stores by the end of 2025.
Having seen its shares lose around 60% of their value over the last 24 months, Kering said last month it had hired former Renault CEO Luca de Meo as its next chief executive from September.
The Italian will face the challenge of restructuring the group as the luxury sector is mired in a slump, caused in part by weak demand in China and bouts of inflation weighing on spending elsewhere.
“We have already started working with him, so we can hit the ground running”, Armelle Poulou, Kering’s finance chief, said on an earnings call.
A newly-agreed 15% tariff rate on all European Union exports to the United States, a key market where Kering makes over 20% of its sales, will add to headwinds.
“The tariff impact is perfectly manageable for us”, said Poulou.
Kering’s brands, which also include Saint Laurent and smaller labels Bottega Veneta and Balenciaga, have already raised prices globally and more specifically in the United States, where Poulou said the company was taking a measured approach, with a close eye on consumer sentiment.
“There could be a second wave of price adjustments in the autumn”, she said.
(Reporting by Tassilo Hummel. Editing by Mimosa Spencer and Mark Potter)
