Gucci Owner Kering Posts 46% Profit Slump Before New CEO Arrives
Group net profit fell to 474 million euros ($547 million) in the first half from 878 million in the same period last year, on sales that were down 16 percent at 7.6 billion euros.
Kering announced in June that it had poached Luca de Meo, then the head of French automaker Renault, to become chief executive and help turn around the company alongside Francois-Henri Pinault, who will remain board chairman.
Pinault's family controls the holding company that is the largest shareholder in Kering, whose crosstown rival LVMH reported last week a 22 percent drop in first-half profit.
Luxury groups worldwide have been hit hard by slowing Chinese appetite for luxury goods and by US President Donald Trump's barrage of tariffs since returning to office this year, which could crimp demand in a North American market that represents a fourth of Kering's sales.
"Though the numbers we are reporting remain well below our potential, we are certain that our comprehensive efforts of the past two years have set healthy foundations for the next stages in Kering's development," Pinault said in a statement.
Gucci remains the prize in Kering's stable of brands, generating 44 percent of its sales and roughly two-thirds of its operating profit.
But it has struggled to turn things around at the Italian fashion house famous for its handbags, and in March it wooed the Georgian designer Demna to take over as artistic director.
Gucci's sales dropped 26 percent in the first half to 3.03 billion euros, for an operating profit of 486 million euros -- down 52 percent.
But investors may have to wait for a recovery plan from De Meo, who has yet to take up his post.
"The change in group management is positive, but earnings will remain under pressure in the short term," analysts at HSBC said in a note before the earnings release.
"Luca de Meo will not take up his post until September 15, and it's unlikely that he will present his strategic plan before the publication of full-year results, expected in February 2026," they said.
Kering's two other top brands are also facing headwinds, with Yves Saint Laurent sales falling 11 percent in the first half to 1.29 billion euros, and Bottega Veneta sales up just one percent at 846 million euros.
Kering must also contend with a debt load that stood at 9.5 billion euros at the end of June, the result of acquisitions and investments in recent years.
It bought a 30 percent stake in Valentino, took over the beauty brand Creed, and opened stores on key but pricey sites in cities including Paris and Milan.
"Selling this real estate (below the purchase cost) is a bitter but necessary solution," analysts at Bernstein wrote ahead of the earnings statement.
Kering said it was "stepping up the initiatives needed to support the development and growth of its houses, while implementing with determination the efforts required to increase its efficiency".
"These actions imply particular vigilance with regards to financial discipline," it added.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
DW
2 hours ago
- DW
Trump tariffs: Where do we stand after new tariffs unveiled – DW – 07/31/2025
Just hours before an Aug. 1 deadline expired, the US president imposed sweeping new tariffs on imports from global trading partners, escalating an aggressive trade policy aimed at reducing the US trade deficit. In his election campaign, Donald Trump once said that "tariff is the most beautiful word in the dictionary." Now, after six months in office, the US president is eager to turn his very specific vision of global trade into reality. With a move that shocked both politics and business across the world, Trump announced on April 2 that he would impose a "baseline tariff" of 10% on all goods imported to the United States. In addition, goods from about 60 other trade partners would face so-called reciprocal tariffs that were even higher and meant as payback for the unfair trade policies of what Trump called "the worst offenders." However, on Thursday Donald Trump signed an executive order again imposing new, and even higher tariffs on scores of countries, citing emergency powers he says he is using to shrink the country's trade deficits with many of its trade partners. The executive order lays out rates to be applied against nearly 70 countries, ranging from 10% to 41% for goods transshipped through other jurisdictions to avoid US duties. In a minor reprieve that opens the door to further negotiations, the White House said the measures will take effect next week for most countries. The order came after a flurry of tariff-related activity in previous weeks that saw some countries strike more favorable terms for trade with the July 27, the US and the European Union agreed that European goods imported to the US would face a 15% baseline tariff. This includes the EU's crucial automobile sector, which had been subject to a 25% levy since Trump took office earlier in January. By contrast, the EU will charge US firms no duties at all, and has pledged to buy US energy worth $750 billion (€656 billion), as well as make investments in the US of around $600 billion, according to the White House. The agreement, which still needs to be signed off by all 27 EU members, has already come under strong criticism. French Prime Minister Francois Bayrou said this week the EU had capitulated, describing Sunday as a "dark day." To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video The United Kingdom was the first country to strike a trade deal with Washington in May. British products will be subject to a 10% base rate, with exceptions for some industries. The UK is still negotiating exemptions for its steel and aluminium products from the 25% rate in force. In return, the UK had to open its market further to US ethanol and beef. Under a deal struck in July, Japan's exports to the US will be taxed at 15%, including automobiles, an industry accounting for 30% of Japanese exports to the US in 2024. Tariffs of 50% on Japanese steel and aluminium will continue to apply and the White House said that under the deal, Japan would make an unspecified $550 billion investments in the US. With regard to South Korea, recent negotiations have resulted in a 15% baseline tariff on all imports from that country — down from a threatened 25% for one of the US's top-10 trading partner and key Asian ally. Trump said Wednesday that South Korea had also agreed to invest $350 billion in US projects and to purchase $100 billion of liquefied natural gas and other energy products. Furthermore, South Korea will accept American products, including automobiles and agricultural goods into its markets and impose no import duties on them, he added. Washington has also concluded trade deals with the Philippines, Vietnam, Indonesia and Pakistan. Products from the Philippines — a major exporter of high-tech items and apparel — will face a 19% levy. Vietnam was able to lower a threatened reciprocal tariff of 49% under a deal reached in early July. A main exporter of clothing and shoes to the US, Vietnam will see its shipments subject to a 20% tariff. Indonesian exports to the US will be taxed at 19% and, according to Washington, nearly all US goods will be able to enter Indonesia tariff-free. Pakistan, which was facing a potential 29% tariff under Trump's April 2 announcement, said Thursday it had struck a deal that would result in lower tariffs, as well as an agreement in which Washington would help develop the country's oil reserves. To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video China — the world's second-largest economy — is a special case. Washington and Beijing had raised tariffs on each other's goods to more than 100% before temporarily lowering rates for a 90-day period. That pause is set to end on August 12. China has taken an aggressive stance in response to Trump's brief threat of imposing a 145% levy on imports, retaliating with tariffs of its own on US goods and blocking the sale of vital rare earth minerals and components used by American defense and high-tech manufacturers. Countries without bilateral trade agreements will soon face reciprocal tariffs ranging from 25% to 50%, with a baseline of 15% to 20% for any not making a deal. Among the tariff levels adjusted in Trump's latest order, Switzerland now faces a higher 39% duty. The Swiss government said Friday it would negotiate to avoid the higher levy, which will potentially hammer its key pharmaceutical industry. The new rate is up from the 31% previously threatened. Brazil is one of the few major economies to run a trade deficit with the United States, meaning Brazil imports more from the US than it exports to the country. Nevertheless, the US president has threatened to impose a 50% tariff on Brazil's products because of political differences. Trump called a current trial against former Brazilian President Jair Bolsonaro a "witch hunt," and has demanded the release of the ultraconservative politician. Brazil's current president, Luiz Inacio Lula da Silva, has in turn called Trump an "emperor" and said he didn't fear publicly criticizing Trump. India, meanwhile, has drawn Trump's ire for its huge trade surplus with the US and its trade ties with Russia. As a result, Trump announced on Wednesday that he would impose a 25% tariff on Indian goods, plus an additional "penalty" because of India's purchase of Russian oil that helps Moscow finance its war in Ukraine. On his Truth Social platform, Trump also wrote that India "is our friend," but added its tariffs on US products "are far too high." Canada and Mexico — two of the US' biggest trading partners — haven't been spared Trump's tariff threats either, even though trade between the three neighbors is governed by the US-Mexico-Canada (USMCA) trade agreement, negotiated during Trump's first term in office. Earlier this month, Trump threatened to raise current tariffs on Mexico from 25% to 30% starting on Aug. 1, saying President Claudia Sheinbaum's government hadn't done enough to help secure their shared border. Many goods certified under the USMCA free-trade pact, however, have remained exempt. On Thursday, the US president extended Mexico's current rates for 90 days to allow more time for trade negotiations. "The complexities of a Deal with Mexico are somewhat different than other Nations because of both the problems, and assets, of the Border, Trump said in a Truth Social post, following a call with Sheinbaum. On Thursday, the US president singled out Canada for a seperate tariff hike raising levies for goods from the country fom 25% to 35% starting Friday (Aug. 1). Trump also warned of more trade consequences for Canada after Prime Minister Mark Carney announced plans to recognize a Palestinian state. Trump's order also cited Canada's failure to "cooperate in curbing the ongoing flood of fentanyl and other illicit drugs" as well as its "retaliation" against his measures. In March, Washington already imposed a 25% tariff on Canadian cars and auto parts, adding a 50% levy on steel and aluminium imports in June.
Int'l Business Times
4 hours ago
- Int'l Business Times
Trump Unveils Slew Of New Tariffs, Punishes Canada
President Donald Trump unveiled new tariffs Thursday on nearly 70 countries -- including a blistering 35 percent on neighbor Canada -- as he seeks to reshape global trade to benefit the US economy. However, in a minor reprieve that opens the door to further negotiations, the White House said the measures will take effect in a week for most countries, not Friday as previously expected. The tariffs are a demonstration of raw economic power that Trump sees putting US exporters in a stronger position while encouraging domestic manufacturing by keeping out foreign imports. But the muscular approach has raised fears of inflation and other economic fallout in the world's biggest economy. Trump raised duties on nearly 70 economies, from a current 10 percent level imposed in April when he unleashed "reciprocal" tariffs citing unfair trade practices. The new, steeper levels listed in an executive order vary by trading partner and go as high as 41 percent. Any goods "transshipped" through other jurisdictions to avoid US duties would be hit with an additional 40-percent tariff, the order said. The American leader separately hiked tariffs on Canadian goods from 25 percent to 35 percent -- starting Friday. He had warned of trade consequences for Canada after Prime Minister Mark Carney announced plans to recognize a Palestinian state at the UN General Assembly in September. "Wow! Canada has just announced that it is backing statehood for Palestine," Trump wrote on Truth Social ahead of the announcement. "That will make it very hard for us to make a Trade Deal with them." But Trump gave more time to neighbor and major trading partner Mexico, delaying for 90 days a threat to increase tariffs from 25 percent to 30 percent, after holding talks with President Claudia Sheinbaum. Canada and Mexico face a separate US tariff regime. Exemptions remain, however, for imports entering the United States under a North American trade pact. With questions hanging over the effectiveness of bilateral trade deals already struck -- including with the European Union and Japan -- the outcome of Trump's overall plan remained uncertain. "No doubt about it -- the executive order and related agreements concluded over the past few months tears up the trade rule book that has governed international trade since World War II," said Wendy Cutler, senior vice president of the Asia Society Policy Institute. "Whether our partners can preserve it without the United States is an open question," she added. The elevated duties come after Washington twice postponed their implementation amid a frantic series of negotiations, alongside announcements of new duties and deals with partners. The 79-year-old Republican has made tariffs core to his protectionist brand of hard-right politics. On Thursday, he claimed the US economy had "no chance of survival or success" without tariffs. But the latest salvo came amid legal challenges against Trump's use of emergency economic powers. After a lower court said the president exceeded his authority, the US Court of Appeals heard arguments Thursday in cases against Trump's blanket tariffs targeting different countries. While the president has touted a surge in customs revenues this year, economists warn the duties could fuel inflation. Proponents of his policy argue their impact will be one-off, but analysts are awaiting further data to gauge for more persistent effects. Those who managed to strike deals with Washington to avert steeper threatened levies included Vietnam, Japan, Indonesia, the Philippines, South Korea and the European Union. Among other tariff levels adjusted in Trump's latest order, Switzerland now faces a higher 39 percent duty. The tariff on Taiwanese products was revised down to 20 percent from 32 percent, but its President Lai Ching-te vowed to seek an even lower level. In Southeast Asia, Phnom Penh and Bangkok welcomed news that they each face a 19-percent tariff -- down from initial threatened levels of 49 percent on Cambodia and 36 percent on Thailand. Britain also reached a pact with the United States, although it was not originally targeted by higher "reciprocal" tariffs. Notably excluded from the drama was China, which faces an August 12 deadline instead, when duties could bounce back to higher levels. Washington and Beijing at one point brought tit-for-tat tariffs to triple-digit levels, but both countries have agreed to temporarily lower these duties and are working to extend their truce. President Donald Trump is expanding his trade war around the world in a bid to use US economic muscle to reshape global trade AFP This US cowboy boot factory faces upheaval from new tariffs on South Africa, where most of the ostrich leather used is produced AFP Chinese and US negotiators met this week in Stockholm to try and avoid deepening the trade dispute between the two leading economies AFP
Int'l Business Times
8 hours ago
- Int'l Business Times
Nvidia Says No 'Backdoors' In Chips As China Questions Security
Nvidia chips do not contain "backdoors" allowing remote access, the US tech giant has said, after Beijing summoned company representatives to discuss "serious security issues". The California-based company is a world-leading producer of AI semiconductors, and this month became the first company to hit $4 trillion in market value. But it has become entangled in trade tensions between China and the United States, and Washington effectively restricts which chips Nvidia can export to China on national security grounds. "Cybersecurity is critically important to us. Nvidia does not have 'backdoors' in our chips that would give anyone a remote way to access or control them," Nvidia said in a statement Thursday. A key issue has been Chinese access to the "H20" -- a less powerful version of Nvidia's AI processing units that the company developed specifically for export to China. Nvidia said this month it would resume H20 sales to China after Washington pledged to remove licensing curbs that had halted exports. But the tech giant still faces obstacles -- US lawmakers have proposed plans to require Nvidia and other manufacturers of advanced AI chips to include built-in location tracking capabilities. Beijing's top internet regulator said Thursday it had summoned Nvidia representatives to discuss recently discovered "serious security issues" involving the H20. The Cyberspace Administration of China said it had asked Nvidia to "explain the security risks of vulnerabilities and backdoors in its H20 chips sold to China and submit relevant supporting materials". China is aiming to reduce reliance on foreign tech by promoting Huawei's domestically developed 910C chip as an alternative to the H20, said Jost Wubbeke of the Sinolytics consultancy. "From that perspective, the US decision to allow renewed exports of the H20 to China could be seen as counterproductive, as it might tempt Chinese hyperscalers to revert to the H20, potentially undermining momentum behind the 910C and other domestic alternatives," he said. Other hurdles to Nvidia's operations in China are the sputtering economy, beset by a years-long property sector crisis, and heightened trade headwinds under US President Donald Trump. CEO Jensen Huang said during a visit to Beijing this month that the company remained committed to serving local customers, adding that he had been assured during talks with top Chinese officials that the country was "open and stable".
