Luxury conglomerate Kering has reported profits “lower than expected” after its revenue dropped 11 per cent to US$10.6 billion in the half-year financial results.

The group’s sales decline is largely attributed to poor performance at Gucci, which accounts for almost half of its sales and two-thirds of its profits. 

Gucci’s revenue declined by 20 per cent to  $4.8 billion, down 18 per cent compared to the previous period. Meanwhile, its operating income totalled $1.2 billion, with an operating margin of 24.7 per cent.

The company said performance in each region aligned with the prior quarter, including a continuing marked decrease in Asia-Pacific. 

Kering’s other luxury labels, Yves Saint Laurent and Bottega Veneta, also faced revenue challenges. 

Yves Saint Laurent’s earnings in the first half of this year were $1.4 billion, a 9 per cent decrease compared to last year. The label said its performance in the Asia-Pacific “deteriorated”, except in Japan, where the company said it showed a “sequential improvement”. 

Meanwhile, Bottega Veneta reported revenue of $836 million, remaining unchanged from last year and increasing by 3 per cent compared to the same period.  Retail sales rose 7 per cent; however, its wholesale revenue was down 19 per cent.

Because of “uncertainties” in the luxury market, the company anticipates a 30 per cent drop in operating income compared to the second half of last year.

Kering chairman and CEO Francois-Henri Pinault said the company is working diligently to improve the conditions for a return to growth. 

“Our houses pursue their investments to enrich their offer, intensify the impact of their communications, and reinforce the exclusivity of their distribution,” he added.

“While the current context might impact the pace of our execution, our determination and confidence are stronger than ever.”