According to BoF, Gucci's third-quarter revenue was its lowest for that quarter since 2016. BoF says it was worse than 2020, and that the brand's third quarter has halved in four years. And Demna's shows are getting great reviews. Fashion people love it. The tills haven't noticed. This is Fashion Business Daily, and it's Friday. Today: Kering's numbers after Thursday's close, and why the market took them so badly; Prada stays just positive while Miu Miu takes a breather; and Deckers turns in a record quarter for Hoka and UGG, with a boost from tariff refunds that you need to subtract.
The Business of Fashion, reporting from Paris on Kering's quarter:
The quarterly figures represent a step backward in Gucci’s effort to reverse declining sales. The brand’s sales had fallen more slowly than expected the previous quarter, with a contained 2 percent decline raising hopes that performance was turning a corner after a year under CEO Francesca Bellettini and designer Demna’s leadership.
These are Kering's own figures, released after the Paris close on Thursday. Group revenue was 3.345 billion euros, flat as reported and down 1 percent on a comparable basis. BoF says analysts were looking for 1 percent growth. Gucci brought in 1.291 billion, down 6 percent comparable, against a Bloomberg consensus of minus 3. Gucci's own retail stores were down 9 percent. So Kering's big message last time was that the Demna product is working. Then the first quarter where you'd expect it to show up, it goes backwards. Kering says traffic is the main constraint. Conversion, average price and average ticket all improved at Gucci, according to the company. Finance chief Armelle Poulou told BoF that mainland China is the main headwind, and said, quote, China is definitely what's weighing most on Gucci's retail. The one number up is wholesale, up 45 percent to 120 million euros. Off a low base, in a channel Kering spent years shrinking. Funny how department stores look better when your own stores are empty. Outside Gucci it's better. Retail at the other fashion houses rose 2 percent, led by Saint Laurent, Bottega Veneta and Brioni. Kering has also closed a net 105 stores so far this year, and now plans at least 125 by December. Then why did the stock get crushed? Reuters has Kering shares down 11 percent on Friday. The reason, according to BoF, is that Kering dropped its guidance for a return to growth in 2026. The release itself only confirms the aim to improve recurring operating margin this year. JPMorgan's Chiara Battistini wrote that progress on desirability remains in its very early stages. And BoF points out that Gucci accounts for more than half of Kering's profit. On the designer changes we've been following, Poulou said the new Saint Laurent designer will be named, quote, very shortly, and McQueen's new designer has already been chosen. On reports that Pierpaolo Piccioli is leaving Balenciaga, she called it a rumour. So that one is still unconfirmed. Two houses waiting on a designer, a third with a question mark over it, and Gucci going backwards. Luca de Meo calls it a multi-season undertaking. He's right about that part.
Eric Sylvers, writing in The Business of Fashion:
Retail sales – a key measure for the group that accounted for 87 percent of the total – rose 1 percent at Prada in the quarter and dropped 3 percent at Miu Miu, which has been cooling in recent quarters following a period of torrid growth.
Prada Group also reported on Thursday. Third-quarter organic revenue rose 1 percent, which BoF says was broadly in line with Bloomberg consensus. For the nine months, revenue was 4.541 billion euros, up 15 percent, or 4 percent organic. Versace added 441 million. Okay, Miu Miu's first drop in more than four years. I'll be honest, I'm not too worried. After a run like that, nothing keeps growing at that pace forever. The comparisons are steep. Miu Miu was lapping 29 percent growth in last year's third quarter and 41 percent for the first nine months. Prada says Miu Miu was broadly stable in the quarter if you exclude the Middle East, and group retail there is down 23 percent for the nine months. That's the company's adjustment, so treat it as their view. CEO Andrea Guerra told analysts that after five years of growth and almost five times the revenue, Miu Miu needs time to, quote, digest, to normalize and then we start again. On China, Prada reported Asia Pacific as stable, with subdued traffic in the mainland. When he was asked about the Chinese consumer's state of mind, Guerra said, quote, what's for sure is that malls are emptier. Most honest line of the week. Put it on a T-shirt. The Americas were again the strongest region, up 13 percent organic over nine months, though Prada says growth slowed against tough comparisons. Patrizio Bertelli said market turbulence is likely to persist. And Versace's creative debut is set for 2027. So the takeaway: Prada stayed in positive territory in a week when Gucci went down 6. In this market, that's a win.
From Deckers Brands' second-quarter results release, on the tariff refunds included in the numbers:
The net benefit to both gross margin and operating margin was approximately 310 basis points. Net of tax, this resulted in an approximate $0.28 benefit to second quarter fiscal year 2027 diluted earnings per share.
Deckers reported after the US close on Thursday for the quarter ended September 30. Revenue was a record 1.481 billion dollars, up 3.5 percent, or 2.8 percent at constant currency. Hoka rose 6.8 percent to 677.2 million, and UGG rose 3.5 percent to 786.4 million. Earnings per share were 2.31 dollars against 1.82, but 28 cents of that comes from refunds of IEEPA tariffs. Same thing that inflated Nike's fiscal fourth quarter, the one we talked about on October 10. The IEEPA refunds come in, and suddenly the margins look great. Right. Reported gross margin was 60.5 percent against 56.2, and about 3.1 points of that is refunds. For the full fiscal year, Deckers raised its EPS guidance to 7.80 to 7.95 dollars, and roughly 52 cents of that is refunds received through October 8. It also expects sales of 5.7 to 5.725 billion, with Hoka up high single digits and UGG up low single digits. High single digits for Hoka. That's healthy, but it isn't breakout growth. And look at the channels. Wholesale was up 5.5 percent, but direct-to-consumer fell 1.8, and comparable direct sales were down 6.4. CEO Stefano Caroti pointed to a challenging consumer environment. That direct number is what I'd watch. If people aren't coming to the Hoka site, retailers are the ones moving the shoes. The product's still good. It just isn't the only cushioned shoe around anymore.
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Weekend homework: see if anyone actually announces a Saint Laurent designer before Monday. If they do, we'll tell you whether it's confirmed or just reported. Thanks for listening to Fashion Business Daily, one of the shows from Lantern Podcasts. We're back Monday.