French Corp that Owns Balenciaga & Gucci Struggles After Featuring Kids in Sexually Exploitive Ads

Kering, the French luxury conglomerate, which owns Balenciaga and other designer labels, struggles following ad controversy

By: Ilana Siyance

Kering, the French-based multinational corporation specializing in luxury goods, has found its bottom line suffering as a result of some offensive ad campaigns.

Founded in 1963, Kering owns the brands Gucci, Balenciaga, Bottega Veneta, Alexander McQueen and Yves Saint Laurent. As reported by the Wall Street Journal, the French luxury-goods conglomerate reported that fourth-quarter revenue dropped 7% on a comparable basis to roughly$5.67 billion, missing analyst expectations.  By contrast, Kering had reported a 23 percent rise in sales in the previous quarter.  “I’m not going to pretend that the results we’re presenting today are up to our ambitions or that I am satisfied,” said Kering Chairman and CEO François-Henri Pinault. “Despite these setbacks, I am more than ever convinced that we are implementing the right strategy,” he later added.

The Group’s biggest brand, Gucci, experienced a 14% drop in comparable sales over the three-month period ending in December.  Kering reported a 4% drop in sales for its “other brands” segment, which includes Balenciaga, over the same period.  As per the WSJ, parent and consumer outrage over the inappropriate Balenciaga ads featuring children have negatively impacted sales at the companies.  At the end of November 2022, Balenciaga had faced major backlash following the launch of an ad campaign which featured children holding teddy bears wearing sexual bondage gear.  The sought-after brand had then pulled the ads and issued an apology saying, “We strongly condemn child abuse; it was never our intent to include it in the narrative,” the company wrote in the statement.   “Our plush bear bags and the gift collection should have not been featured with children. This was a wrong choice by Balenciaga, combined with our failure in assessing and validating images.”

Some of the ads sexualized children with BDSM imagery, and there was a second set of tasteless ads which featured legal documents from a Supreme Court case that ruled against child pornography laws. Regarding the second set of ads the company had apologized saying “inclusion of these unapproved documents” was done by a third party contract worker hired for the photo shoot, adding that it was “reckless negligence”.  Balenciaga sued Nicholes Des Jardins, who designed the set, and the production company North Six, Inc. for $25 million over the campaign.

At the time, industry experts predicted these ad campaigns would likely spell major financial consequences for Balenciaga and Kering.  “I don’t see how they defend themselves, quite honestly,” luxury marketing expert Pam Danziger had told The Post. “I think this will have a very strong impact on the brand ultimately.”  “I believe someone will pay the price and I don’t think it will be the stylists or the photographers,” Danziger said, referring to the finger-pointing. “This was an intended message.” It seems now that indeed customers were not that quick to forgive and forget.

“We made a clear error of judgment with no intention at all to shock, to provoke or to hurt anyone. So I take full responsibility for this episode. And I present our apologies to anyone who was affected,” Mr. Pinault told the WSJ last week.  Kering has said that the ads led to a “difficult month of December”.   Balenciaga’s sales were negatively impacted in the U.S., the U.K. and the Middle East, said Mr. Pinault.  The CEO told the WSJ that people ask him why more people weren’t fired over the scandal.  “There was no intentionality,” he replied. “We’re allowed to make mistakes in a group like Kering. We’re not allowed to make the same mistake twice, but we have a right to make mistakes. That’s important to me.”

Demna, the designer at Balenciaga who dropped his last name Gvasalia,  has been under fire for the ads.  In a recent interview in Vogue, Demna said he plans to focus on making clothes rather than generating buzz through elaborate marketing feats and fashion shows. Demna said that the teddy bear bags were supposed to allude to punk culture, not bondage.  Still, he apologized for featuring children, “in images that included objects that were not related and inappropriate to them.”

In January, Gucci tapped low key Italian designer Sabato De Sarno as its new creative director, in a bid to stimulate growth and breath life back into the brand. De Sarno will lead Gucci’s design studio, with responsibility for its women’s, men’s, leather goods, accessories and lifestyle collections. He replaces famed Gucci designer Alessandro Michele, who stepped down in November.

While Gucci and Balenciaga have suffered a slowdown in revenue and sales in the last quarter, other Kering brands, including Saint Laurent and Bottega Veneta, reported an increase in sales for the fourth quarter. As per the WSJ, rivaling designers have been reporting strong sales growth too. Even despite inflation and the prevailing economic uncertainties, French luxury group LVMH Moët Hennessy Louis Vuitton, the world’s largest luxury goods company, reported a boost in sales at its Louis Vuitton brand and its Dior brand.  Similarly, luxury brand Hermès announced robust sales growth on Friday, in its end-of-year results.