Luxury Headlines – 26/03/2024
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BMW Reports Record Financial Performance in 2023
German automaker BMW, owner of the BMW, MINI, BMW Motorrad, and Rolls Royce brands reported a 9% increase in sales, reaching nearly $170 Bn, primarily attributed to robust growth in the fully-electric segment, where sales almost doubled year-over-year. The company expects to sell more than half a million fully electric vehicles in 2024. The fully electric car segment saw a 92% increase in sales year-over-year, fueled by the top two regions, Europe and China, regarding vehicle deliveries, particularly for BMWs and MINIs. In comparison, the US saw delivery growth at around 9%. 2023, therefore, saw much success in the strategic roadmap of increasing EV sales and improving operational profitability, according to management.
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Kering Forecasts Q1 2024 Comparable Revenue Drop of 10%
Kering Group, owners of Gucci, Saint Laurent, and Bottega Veneta, expect a 10% decline in Q1 revenue at comparable rates, exceeding analysts’ predictions of a 4% decline. Gucci’s comparable revenue will likely fall by an even steeper 20% year-on-year. This is driven by a lackluster performance in the APAC region and softening sales in aspirational products for the Saint Laurent brand. In addition, Bottega Veneta revenues have been affected by the ongoing wholesale cleanup. The financial consolidation of the Creed fragrance brand revenues and other brands’ relatively flat performance are expected to help offset the overall drop in revenues to some degree. At the same time, Gucci’s new collections by De Sarno have been met with applause and enthusiasm. For macro context, credit card purchases on luxury spending in the US fell by 15% in February, according to Citi, preceded by a 19% drop in January. This underscores the continued slowing of luxury consumption in this region, potentially heralding weak results for other brands.
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Balmain CEO Exits Company
The CEO of Balmain, Jean-Jacques Guevel, is departing after four years in his role leading the brand. Balmain is owned by Mayhoola, a Qatari-based investment fund specializing in the luxury sector, and also has a majority stake in Valentino, among other investments. Guevel has led the company through a period of strong growth but is stepping down to pursue other interests. The company plans to announce a new CEO soon.
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Selena Gomez Considers Sale of Cosmetics Brand Rare Beauty
Selena Gomez's cosmetics brand, Rare Beauty, has experienced tremendous success since its founding in 2020 and has managed to cross over $400 million in net sales. Gomez and her team are considering a potential exit for the company, which is roughly valued at $2 billion and is a famous brand with easy-to-use packaging. The company is considering an initial public offering (IPO) or a sale to another company. Gomez has a large social media following and has used it to promote her brand. Rare Beauty is distributed through Sephora, both online and in-store, as well as through the official Rare Beauty website.
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Kenzo Opens First Standalone Store in the Middle East
LVMH-owned brand Kenzo is set to launch its first standalone boutique in the U.A.E., with the store opening in Dubai Mall, Dubai. The boutique, which spans 1300 square feet, brings to life the signature “East meets West” philosophy of Japanese creative director Tomoaki Nagao, better known as Nigö Goldeneye. The brand is also launching an exclusive collection in honor of Ramadan this year to localize its offerings.
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Sephora Exits the South Korea Beauty Market
LVMH-owned Sephora has announced it will be pulling out of the South Korean market after four years in operation. The beauty giant struggled to gain a proper foothold in the market. Sephora entered South Korea with the opening of a flagship store in Seoul’s Gangnam district, which was later followed by five more store openings. Challenges faced by Sephora included competing in a highly saturated beauty market against competitors like beauty giant CJ Olive Young and struggling to achieve profitability over the last four years.
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