In a climate of economic and geopolitical uncertainty, Italian groups like Prada and Moncler shine while French giants LVMH and Kering stumble
There’s no denying it: the global luxury market is facing a challenging period. Sluggish economic growth, eroding consumer confidence, and escalating geopolitical tensions have all contributed to a significant drop in sales momentum compared to the peaks seen after the pandemic.
However, while French titans are experiencing a rough patch, some Italian groups are showing positive results. This divergence reflects not only the up-and-down dynamics of the ever-evolving and fiercely competitive global luxury market, where the financial performance of major conglomerates can vary drastically in a short time, but also the distinct strategies adopted by different players.
On one side, heavyweights like LVMH and Kering are struggling with declines in revenue and profits, worsened by currency fluctuations and shifts in consumer demand. On the other, Italian groups like Prada and Moncler are not just weathering market turbulence but also thriving, with double-digit revenue increases.
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The results from the first half of 2024 highlight this clear contrast. French giants are contending with a slowdown in demand and challenges posed by currency exchange rates. Despite some areas of growth, like in Japan and the European market, the overall performance did not meet analysts’ expectations. Conversely, Italian conglomerates show a remarkable ability to attract and engage consumers through targeted strategies, innovative collections, and a growing global presence. This scenario highlights the importance of adaptation and innovation in a rapidly changing industry and how it can be the key to success. Here’s a glimpse.
In the first half of fiscal year 2024, LVMH recorded a revenue of €41.7 billion, an increase of 2% in organic terms but a decrease of 1% on a reported basis compared to the same period last year. Moreover, they fell short of average estimates of €42.3 billion. Despite growth in Europe, the US, and Japan, weak sales in China remain a weak spot for the group. Overall, exchange rate fluctuations had a substantial negative impact. The group’s net profit came in at €7.3 billion, a 14% decrease compared to the same period the previous year.
Kering reported revenues of €9 billion for the first six months of 2024, down 11% from the same period last year. Net profit nearly halved to €878 million (the luxury fashion conglomerate had warned investors it would likely be down 40 to 45% earlier this spring). The Gucci, Bottega Veneta, and Saint Laurent owner does not break down the individual earnings of all its brands, but of those it does, Gucci was the loss leader: first-half revenue was €4.1 billion, down 20% as reported and down 18% on a comparable basis.
The Prada Group continues its unstoppable growth, closing the first half with net revenues of €2.55 billion, up 17% year-on-year. This growth was mainly driven by a 93% increase in Miu Miu’s retail sales, fuelled by successful shows and events. The Prada brand also saw a 6% growth in retail, supported by a well-balanced product mix. Overall, the group's retail sales for the period ending 30 June 2024 amounted to €2.26 billion, up 18% year-on-year, fuelled by like-for-like and full-price volumes. If you’re wondering which markets are driving the success, they reported double-digit growth in Asia Pacific, Europe, Japan, and the Middle East, with a modest sequential improvement in the Americas.
Moncler Group reported revenues climbed 8% in the first half of 2024, to €1.23 billion compared to €1.14 billion in the first half of 2023. Moncler brand revenues were up 11% to €1.04 billion, with Asia driving the majority of the brand’s sales at 49%, with sales in the region up 12% year-on-year to €513 million. Japan and Mainland China have been highlighted as key growth drivers, along with Korea. EMEA also saw 12% growth, and the Americas were up 7%.
Angelo Ruggeri
Journalist, Master Programme Tutor; Fashion Styling Course Leader, Milan