• Full Year Revenue: EUR 17.2 billion, down 12% year-on-year.
• Recurring Operating Income: EUR 2.6 billion, with a margin of 14.9%.
• Free Cash Flow from Operations: EUR 1.4 billion, or EUR 3.6 billion excluding real estate transactions.
• Net Financial Debt: EUR 10.5 billion at year-end.
• Gross Margin: Down 250 basis points due to adverse mix effects and less positive hedging gains.
• Store Count: 1,813 stores, a net increase of 42 units.
• Gucci Revenue: EUR 7.7 billion, down 23% reported and 21% comparable.
• Saint Laurent Revenue: EUR 2.9 billion, down 9% reported and comparable.
• Bottega Veneta Revenue: EUR 1.7 billion, up 4% reported and 6% comparable.
• Kering Eyewear Revenue: Close to EUR 1.6 billion, up 6% comparable.
• Kering Beaute Revenue: EUR 323 million, with high single-digit comparable growth.
• Dividend Proposal: EUR 6 per share.

• Warning! GuruFocus has detected 8 Warning Signs with PPRUF.

Release Date: February 11, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Kering SA (PPRUF) has maintained a consistent strategy focused on long-term brand health without short-term compromises.
• The company has a strong portfolio of complementary luxury brands, including Gucci, Saint Laurent, and Bottega Veneta, which are well-positioned in the market.
• Kering Eyewear and Kering Beaute have shown steady growth and profitability, contributing to the group's stability and resilience.
• The company has implemented a detailed strategy to elevate brand desirability and penetrate more elevated clienteles.
• Kering SA (PPRUF) has made significant progress in reducing inventories, particularly at Gucci, which saw a 40% reduction over two years.

Negative Points

• Kering SA (PPRUF) faced a challenging 2024, with results falling short of initial expectations due to adverse market conditions.
• Gucci experienced low traffic and a significant drop in sales, particularly in the second half of the year.
• The company's gross margin declined by 15% in absolute terms, with a 2% decrease as a percentage of revenue.
• Wholesale revenue was down significantly, with a planned further reduction in 2025, impacting overall sales.
• The company anticipates a year of stabilization in 2025, with modest top-line growth and continued pressure on profitability.

Q & A Highlights

Q: Francois-Henri, how has the centralization and integration strategy impacted Kering's brands, particularly Gucci? A: Francois-Henri Pinault, CEO, explained that the strategy has shifted from scaling brands independently to expanding their customer base with more detailed support from the group. This involves leveraging expertise in product and retail, and providing more resources and control to brands like Gucci to enhance their growth and resilience.

Q: Francesca, critics say Gucci's shift from maximalist to minimalist aesthetics has made the brand less exciting. How do you respond, and what role will the new creative director play? A: Francesca Bellettini, Deputy CEO, stated that the change aimed to stabilize Gucci by focusing on its heritage and elevating product quality. The new creative director will inject fashionability and desirability, maintaining Gucci's unique blend of tradition and fashion.

Q: What are the priorities for the new management at Saint Laurent and Balenciaga? A: Francesca Bellettini noted that the new CEOs will focus on evolving the brands from strong foundations, emphasizing retail improvements and enhancing store productivity. Both have experience working with strong creative directors to translate creativity into solid business results.

Q: How does Kering view the current challenges in the Chinese market, and what is the outlook? A: Francois-Henri Pinault believes the issues are cyclical rather than structural, driven by low consumer confidence and economic factors. He expects stabilization this year, with potential improvement as Chinese authorities support the consumer market.

Q: Can you elaborate on the expected financial performance for 2025, particularly regarding Gucci's operating profit? A: Jean-Marc Duplaix, Deputy CEO, indicated that 2025 will be a year of stabilization, with modest top-line growth due to network rationalization and wholesale decline. Gucci's focus will be on improving gross margins and operational efficiency, with a gradual improvement expected in the second half of the year.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.