French luxury giant Kering on Wednesday reported a rise in annual profit despite poor performances at its flagship brand Gucci and Balenciaga.
Kering, whose empire includes Yves Saint Laurent, Bottega Veneta and Alexander McQueen, said net profit climbed 14 percent to 3.6 billion euros ($3.9 billion) in 2022.
Sales jumped 15 percent to 20 billion euros.
“We have reason to be satisfied about the global performances of all our houses except Gucci,” group chairman Francois-Henri Pinault said at the company results presentation.
Kering sales fell two percent in the fourth quarter, dragged down by an 11 percent drop at Gucci and three percent at its “other houses”, which include Balenciaga, in the last three months of the year.
“Gucci is obviously our priority because it is our greatest asset,” Pinault said. “The brand didn’t have its best performances lately,” he said, adding that he was determined to get it “back on track”.
The results were weighed down by China which still had Covid restrictions most of last year.
The world’s second biggest economy, a major market for luxury brands, lifted its zero-Covid policy in December.
“The year 2022 is clearly not up to our expectations (for Gucci) and what we think about the brand’s potential,” said Jean-Marc Duplaix, the group’s chief financial officer.
The departure of renowned Italian fashion designer Alessandro Michele as Gucci’s creative director, which was announced in November, “did not have an impact as such on sales”, Duplaix said.
Michele was replaced by another Italian designer, Sabato De Sarno, in January.
Gucci sales were up eight percent at 10.5 billion euros for the full year in 2022.
Sales at Yves Saint Laurent soared by 31 percent to reach 3.3 billion euros.
Other houses were up 16 percent for the year at 3.9 billion euros.
Balenciaga faced controversy last year over an ad campaign that appeared to reference child abuse.
The ads, published late last year, featured children holding bags designed to look like teddy bears, but with studs and harnesses, and surrounded by adult items including wine glasses.
It sparked huge condemnation online, including from celebrities such as Kim Kardashian.
“I take full responsibility for this episode,” Pinault said. “We will work to regain the trust of customers.”
Balenciaga’s creative director Demna, who goes by one name, had also apologised last week.