PARIS — Kering chairman and chief executive officer François-Henri Pinault hopes the French luxury group’s turnaround efforts will start bearing fruit by the end of this year.
“We are determined to deliver improvements at the end of this year already and in 2025,” he said at the company’s annual general meeting Thursday in Paris.
Kering said this week it expected operating profit in the first half to plummet by 40 to 45 percent amid a drop in sales at its star brand Gucci, which is undergoing a revamp under CEO Jean-François Palus and creative director Sabato De Sarno.
The news caused the company’s share price to fall by more than 7 percent on Wednesday, and prompted analysts to cut their earnings estimates, some for the third time this year.
“Gucci turning positive in Q3 is still a best case to which we do not subscribe; we think it will take time for consumers to pick up the change and reengage with Gucci,” HSBC said in a research note on Thursday.
“However, we believe Gucci’s rebound will need to materialize in Q4; failure to do so, we think, will raise further questions about the brand repositioning and management,” it added.
Pinault said he was unhappy with Kering’s results and share price performance. The stock is down almost 17 percent so far this year.
“As you know, I am the group’s largest shareholder and I am obviously not satisfied with this share price,” Pinault said.
The Pinault family’s holding company Artémis owns 42.23 percent of Kering’s share capital and 58.99 percent of the voting rights.
“I am totally committed to making sure the stock price recovers by restoring financial performance, not in the very short term, but in a sustainable manner in order to generate a stock price that is less volatile and more solid in the months and years to come,” he added.
Pinault said he was counting on a combination of improvement in the macroeconomic climate, with an easing of the inflationary pressure that has weighed on the aspirational consumers who make up the majority of Kering’s customer base, and the success of the group’s plan to rev up its brands.
He signaled his confidence in Kering’s new management structure following a reshuffle last July that saw Francesca Bellettini promoted to deputy CEO in charge of brand development, and Jean-Marc Duplaix to deputy CEO in charge of operations and finance. Both flanked Pinault in their first AGM since taking up their new positions.
“Obviously, you are disappointed, you are frustrated, too, and no one more so than me, I can assure you,” Pinault told shareholders after the company decided to keep its annual dividend unchanged at 14 euros.
“The diagnosis has been made, all teams are on deck. We are 100 percent focused on executing our action plan, and I must say the new organization put in place last summer allows us to steer this execution much more efficiently,” he said.
While he was generally contrite in tone, Pinault sounded more combative when challenged by James Fraser, a representative of animal rights group People for the Ethical Treatment of Animals, who alleged that a recent investigation uncovered cruelty at farms in Thailand supplying snake skins to a Kering-owned tannery.
“Despite Kering’s grand claims about animal welfare, nothing has changed,” Fraser said in French, prompting Pinault to cut him short.
“I’m going to stop you right away. I can’t let it be said that nothing has changed and that all our initiatives on sustainability are greenwashing,” Pinault said.
“We are making every effort possible. We have charters on animal welfare, in particular, that are very advanced. I am totally against this kind of situation,” Pinault added. “Rest assured that we are ready to collaborate with you to put an end to this type of practice, even if we continue to use exotic skins.”
The executive’s remarks were met with applause. Shareholders did not personally sanction Pinault for the company’s poor performance, with 97.4 percent voting to approve his pay package. In 2023, Pinault’s salary consisted of a fixed payment of 1.2 million euros, and a further 6.1 million euros indexed on performance.
