Kaiyun Group warns that its recurring operating income in the first half of the year may decline by more than 40%

In the midst of a cold winter in the luxury goods industry, Kering Group has felt a chill. On Tuesday, April 23, Kering Group issued a warning statement, stating that due to a decrease in spending by affluent consumers on its largest brand Gucci, the company expects a 40% to 45% decline in recurring operating income in the first half of 2024. Particularly in the Chinese market, Gucci's first-quarter year-on-year sales fell by 18%, slightly better than analysts' expectations of a 19.4% decline. At the same time, Kering Group announced first-quarter revenue of 4.5 billion euros, slightly higher than analysts' expectations of 4.47 billion euros. Comparable store sales in the first quarter fell by 10%, in line with analysts' expectations of a 10.2% decline. Gucci's first-quarter revenue was 2.08 billion euros, slightly higher than analysts' expectations of 2.05 billion euros. Following the announcement, as of the time of writing, Kering Group's stock fell by 2.43% intraday. According to the warning issued by Kering Group in March, the group's first-quarter sales fell by 10% year-on-year. Among them, the sales of its second-largest brand Yves Saint Laurent fell by 6%. Benefiting from double-digit growth in North America, Western Europe, and the Middle East, Bottega Veneta bucked the trend with a 2% increase. Currently, Kering Group is working hard to reverse Gucci's decline, as this brand contributes over two-thirds of the group's operating profit. Last year, the luxury goods group appointed a new creative director for Gucci, and the new collection designed by them began to enter stores in February this year. However, the company stated that the demand for luxury goods in the market is cooling down, and Gucci's recovery will take time. Armelle Poulou, Chief Financial Officer of Kering Group, stated at a press conference on Tuesday, "The Chinese market is currently quite polarized, with strong demand from consumers for ultra-high-end products or more affordable products, while Gucci, positioned in the middle, has not benefited from this polarization." Poulou also pointed out that as the new collection is promoted, Chinese consumers are currently adopting a wait-and-see attitude, but this situation may change rapidly. So far, the new collection has been "very popular, especially in ready-to-wear and footwear." In 2024, performance in the luxury goods industry is diverging, with Kering Group still lagging behind its larger French competitor LVMH. LVMH owns about 75 luxury brands, including Dior and Tiffany, with organic revenue growth of 3% in the first quarter. Similarly, Hermes International SCA, which has also performed well in combating market downturns, will announce its sales data on Thursday Since the beginning of this year, Cloud Group's stock price has fallen by 16%, while LVMH's stock price has risen by 8%, and Hermes' stock price has risen by 21%